International trade isn't just about exchanging goods and services across borders — there's something else that travels with every shipment: carbon emissions. Every time a product is made, energy is used, and that energy leaves a carbon footprint.
When goods cross borders, carbon emissions travel along with them. So when developed countries juggle their growing dependence on imports — while trying to clean up their carbon emissions accounts, they're looking for ways to regulate the emissions embedded in the products they import.
This is where the Carbon Border Adjustment Mechanism (CBAM) comes into play — a regulatory tool designed to address the carbon emissions embedded in imported goods.
So before we delve deep into the topic / let’s start with the basics: What is CBAM? And why does it matter?