Summary Description
- Creates a carbon price on the importation of goods from sectors high in GHG emissions.
- TopicThe topic of the legislation or policy covered by the text
- Animal healthClimate & environmental protectionTaxation
- SpeciesThe animal, or type of food production, covered by the text
- JurisdictionCountry or geographical area where the text applies
- EU
- Sub-jurisdictionCountry or state where the text applies
- N/A
- Type of ActWhether the act is a law, regulation, or policy, or another type of text
- Legislation
- StatusIndicates whether the act is in force or not
- In force
- Legal ValueWhether the text is binding or not
- N/A
- Date enactedDate the text was adopted
- N/A
- Date updatedDate when the entry was last updated by the CALF team
- June, 2023
- Official citation
- Regulation 2023/956 Establishing a Carbon Border Adjustment Mechanism, 2003 OJ L 130/52104
Strengths & Weaknesses
- Strengths
- Creates a uniform framework to ensure that similar carbon taxation policy is applied both in the EUs internal market and on imported goods, and is linked to the EU Emission Trading System (ETS).
- Tackles the conduct of shifting business and emissions to other countries with lower environmental standards and taxes (i.e., carbon leakage).
- Encourages more sustainable production process in countries which seek to import goods to the EU, while ensuring WTO compatibility. Includes a monitoring and reporting mechanism (starting in 2023).
- Weaknesses
- In its first implementation phase, the EU's Carbon Adjustment Mechanism will not apply to agriculture nor livestock.
- There exist concerns regarding unfair economic impact on lower income and climate vulnerable countries, which depend on the EU's high export capacity as a result of the EU's manufacturing sectors' relocation in developing countries.