Carbon Border Adjustment Mechanism

The Carbon Border Adjustment Mechanism (CBAM) is one of the key instruments introduced by the European Union (EU) to achieve its greenhouse gas emission reduction targets set under the European Green Deal. Through this mechanism, the EU aims to protect Europe’s competitiveness against the costs of the green transition while also encouraging stronger global action to combat climate change.

CBAM envisages the application of a carbon pricing system equivalent to the EU Emissions Trading System (ETS), which has been in place since 2005, at the import stage for products falling within its scope.

Implementation Timeline

The CBAM Regulation entered into force on 1 October 2023, limited to reporting obligations. Accordingly, a transitional period has been established between 1 October 2023 and 31 December 2025, during which no financial obligations will arise.

The transitional phase aims to establish the implementation principles, collect data, and identify shortcomings for improvement. Based on the experience gained during this period, necessary adjustments and secondary legislative arrangements will be made.

Amendments to the Carbon Border Adjustment Mechanism

On 10 September 2025, the European Parliament approved amendments to the Carbon Border Adjustment Mechanism (CBAM). These amendments were introduced under the “Omnibus I” simplification package published on 26 February 2025 and reached the legislative stage following a provisional agreement between the Council and the Parliament in June.

The new regulation aims to reduce the administrative burden on small and medium-sized enterprises (SMEs) and companies with low import volumes, simplify reporting procedures, and make compliance costs more manageable. Following the European Council’s approval, the amended text is expected to be published in the Official Journal of the European Union and enter into force.