Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism - Consolidated text

The Carbon Border Adjustment Mechanism (CBAM) is an EU policy that charges importers for the carbon emissions embedded in certain high-emission goods, ensuring fair competition and encouraging lower-carbon production abroad.

Carbon Border Adjustment Mechanism

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Laws and Policies

CCLW

CCLW national policies

Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism

Regulation (EU) 2025/2083 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism

Regulation passed

Amended

The EU’s Carbon Border Adjustment Mechanism (CBAM) allows for a price to be put on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. The gradual introduction of the CBAM from October 2023 is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry.
The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. CBAM will eventually – when fully phased in – capture more than 50% of the emissions in EU ETS covered sectors.
By confirming that a price has been paid for the embedded carbon emissions generated in the production of certain goods imported into the EU, the CBAM is intended to ensure the carbon price of imports is equivalent to the carbon price of domestic production, and that the EU's climate objectives are not undermined.

Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, amended by Regulation (EU) 2025/2083 (CBAM)

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Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

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Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

This sector involves the wholesale and retail selling of goods.

A long-lived, colourless gas, chiefly emitted from fossil fuel combustion, deforestation and cement production.

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

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The activities of industries that transforms raw materials into finished goods through industrial processes.

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Compulsory, required payments to the government that are levied more-or-less in proportion to the services provided. Fees and charges range from entrance fees to national parks, charges on land-based sewage discharge.

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Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism - Consolidated text

Target

Policy instrument

Risk

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance