CBAM - A revolution in levelling the playing field in the global market
Introduced in 2023, the CBAM system is a key element of the EU's strategy to combat the climate crisis. Its objective is to equalise the production costs of high-emission goods manufactured both inside and outside the EU customs territory. To date, European enterprises, for example, in the steel sector – have faced rising costs under the EU Emissions Trading System (EU ETS), which placed them at a disadvantage compared to foreign competitors operating in countries with less stringent environmental standards.
Instead of the previous free emission allowances, which were inconsistent with the "polluter pays" principle, the Union is opting for universal carbon pricing. This new mechanism ensures that emission costs for all producers operating in such a large market become identical, completely transforming competitive dynamics.
As noted by Szymon Lipiński, Senior Tax Consultant at Crowe Poland, in an article for BPCC Contact Magazine titled " CBAM and the global climate race – is Europe setting the new standard?":
"Fundamentally, CBAM serves as an import carbon pricing mechanism that is a replica of the EU Emissions Trading System. European producers are required to buy emissions allowances under the EU ETS. Importers will soon have to buy certificates for the emissions contained in the goods they bring into the EU under CBAM. These CBAM certificates’ price is directly correlated with the rolling weekly average of the EU ETS allowance price. In theory, this linkage should enable CBAM to satisfy the WTO’s requirements for trade restrictions since it guarantees that the carbon cost of imports is equal to the carbon cost of domestic production."
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The article is available in English only.
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