The carbon border adjustment mechanism would aim to prevent carbon leakage resulting from carbon pricing in the EU emissions trading system.

By Paul A. Davies and Michael D. Green

On 22 July 2020, the European Commission (the Commission) published a consultation on a carbon border adjustment mechanism (CBAM) that is open until 28 October 2020. According to the Commission, the CBAM would aim to ensure equivalent carbon costs between imports and goods produced in the EU. Notably, the Commission’s COVID-19 recovery fund includes the CBAM as a repayment option. (For more on the recovery fund, see this post.)