CBAM. What it is and how it affects international trade

International trade is entering a new era of sustainability driven by stricter environmental policies. Within this context, the European Union has launched the Carbon Border Adjustment Mechanism (CBAM), a tool that seeks to ensure that imports respect the same carbon standards as products manufactured in the EU.

The CBAM is part of the global effort to achieve climate neutrality by 2050 and represents a significant change in the way companies manage their global carbon footprint.

What is the CBAM?

The Carbon Border Adjustment Mechan ism ( CBAM) is a revolutionary initiative of the European Union that is transforming the landscape of international trade and the fight against climate change.

We will explore this mechanism, how it works and its impact in detail.

Objectives and context of the CBAM within the Green Compact

The implementation of this mechanism has an environmental purpose and is part of the European Green Pact, the main objective of which is to achieve climate neutrality at EU level by 2050.

The CBAM aims to prevent carbon leakage in order to ensure the effectiveness of EU climate policy and contribute to decarbonization on a global scale.

But what does this mean in practice?

Imagine you own a steel mill in Europe. You comply with all environmental regulations, which increases your production costs.
Meanwhile, your competitor in a country with laxer regulations can produce more cheaply.

The CBAM seeks to level this playing field by ensuring that imported products reflect their carbon footprint in their price.

Sectors affected by CBAM

CBAM currently applies to six key sectors due to their high risk of carbon leakage, significantly impacting the industries that generate the most emissions:

Cement: Cement production is highly carbon intensive due to the use of fossil fuel burning kilns.

Iron and Steel: These materials are essential in construction and manufacturing, but their production involves considerable emissions due to the smelting of ores.

Aluminum: It requires large amounts of energy, making it a key sector in emissions reduction.

Fertilizers: Fertilizer production releases greenhouse gases, mainly nitrous oxide, which has a high global warming potential.

Electricity: Electricity generation, especially from non-renewable sources, is a major contributor to carbon emissions.

Hydrogen: Although hydrogen can be a clean energy source, its production, particularly when generated from fossil fuels, is highly carbon intensive.

Expansion to other sectors:

The European Commission also foresees the possibility of expanding the CBAM to other sectors with a high risk of carbon leakage, as long as justified emissions support it.

Sectors such as plastics, paper and chemicals could fall into this category in the future, depending on policy and impact analysis.

Gradual implementation of CBAM (2023-2026): Obligations and Key Dates

The implementation of the CBAM has been designed with a progressive approach, establishing a transitional period that started on October 1, 2023 and will end on January 1, 2026.

During this period, importers, or indirect customs representatives when the importer is not established in the EU or has been appointed and accepted, are required to submit a quarterly report with the total quantity of goods imported during the previous quarter, the implied direct and indirect emissions and the carbon price due in the country of origin for the implied emissions.

These reports seek greater transparency and allow companies to prepare for the full implementation of the mechanism, as, from January 2026, the obligations will be tightened, requiring more rigorous control over emissions linked to imports and the purchase of carbon certificates.

Calculation of emissions and CBAM certificates: How will it be done?

During the transitional period, the European Commission has established default values for calculating import-related carbon emissions.
These values will facilitate the adaptation process for companies.

However, from January 2026, importers will be required to register with national authorities, where they will be able to purchase CBAM certificates.

The price of these certificates will be determined on a weekly basis, based on the average auction price of EU Emissions Trading System (ETS) allowances, expressed in euros per ton of CO2 emitted.

Importers will be required to declare the emissions implicit in their products and will have to surrender annually the corresponding number of certificates to cover these emissions.

This will ensure that the cost of carbon is included in imports, giving both companies and countries an incentive to reduce their carbon footprints.

Companies that succeed in reducing their emissions will be able to reduce their need for certificates, thus creating a direct economic incentive to adopt more sustainable practices.

This system will not only level the competitive playing field, but will allow the European Union to remain consistent with its 2050 decarbonization target, preventing carbon leakage and ensuring that imports respect European environmental regulations.

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Impact of CBAM on International Trade and Supply Chains

The CBAM represents a significant change in international trade, particularly for exporters wishing to access the EU market.
The new regulations will impose additional costs on products from countries with laxer environmental regulations, forcing exporters to assess their own carbon emissions.

This could disrupt global supply chains, as exporters to the EU will have to adjust their practices to comply with CBAM requirements.
Countries with lower environmental standards could see their products become more expensive, encouraging greater adoption of sustainable policies globally.

On the other hand, CBAM raises questions about its impact on emerging economies that depend on exports to the EU, as well as the compatibility of this measure with World Trade Organization (WTO) rules.

These countries could face the difficult task of adapting their industries to the new regulations, which could generate trade tensions, but also incentives to invest in clean technologies and reduce carbon emissions.

So some of the questions that are now up in the air are: How will it affect supply chains,what role will emerging economies play,how will regulations be adapted to the WTO? Ultimately, CBAM will not only transform international trade, but will also put pressure on companies and countries around the world to adopt more sustainable practices and align with the EU’s climate goals.

Preparing for CBAM: Steps for importers and exporters to take

To comply with CBAM regulations and mitigate risks, companies should take several key steps: Familiarize themselves with the EU CBAM platform: Understand how the system works and its requirements.

Measure and document carbon emissions: Establish a rigorous system for calculating product-related emissions.

Reduce carbon footprint: Implement clean technologies and sustainable practices to minimize carbon use.

Keep up with regulatory updates: Follow CBAM developments and adaptations to ensure ongoing compliance.

These actions will help companies align with CBAM requirements and reduce the financial and operational impact of regulation.

Long-term benefits of CBAM: Sustainability and Global Competitiveness

The Border Carbon Adjustment Mechanism is more than just a trade regulation. It represents a bold step by the EU towards a more sustainable future, challenging the world to follow suit. Although its implementation is not without its challenges, the CBAM has the potential to be a crucial catalyst in the global fight against climate change.

As business people, politicians or simply conscientious citizens, it is critical that we understand and prepare for this new paradigm in international trade and climate policy. The future is green, and CBAM is a key piece in this global puzzle.

Across Logistics and its Commitment to the Environment

In line with sustainability and the CBAM approach, Across Logistics has implemented a number of initiatives that highlight its leadership in green logistics.
Notable actions include the use of alternative fuels such as LNG and biomethane, carbon offsetting through its POSITIVE OFFSET program, and route optimization to reduce emissions.

Through these measures, Across Logistics not only reduces its carbon footprint, but also supports other companies in their transition to more sustainable logistics by offering customized solutions and expert advice.

By leading by example, Across demonstrates that operational efficiency and environmental friendliness can go hand in hand, positioning itself as a key strategic partner for companies looking to integrate sustainable practices into their supply chain.

Contact Across Logistics now and take the next step towards more sustainable logistics.