Amid global green transformation, the EU, to meet climate goals and curb "carbon leakage," will impose the Carbon Border Adjustment Mechanism (CBAM, or carbon tariff) from January 1, 2026.
This hits power-related exports hard. The cost pain point for companies is in raw material production, like steel smelting with high emissions. CBAM factors in "embedded carbon emissions," eroding price advantages and competitiveness.
But the EU has rules. Importers of goods over 50 tons must apply as authorized declarants, buy certificates priced per EU Emissions Trading System allowance auctions, and submit annually. Proof of paid carbon prices allows deductions.
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