EU CBAM implementation challenges

The EU’s Carbon Border Adjustment Mechanism (CBAM) is an environmental measure putting a price on embedded emissions of certain goods imported into the EU that, when it is fully up and running, will be payable by importers or indirect customs representatives. The instrument helps to address carbon leakage while phasing out free allocation of EU ETS allowances so that domestic emitters can reduce their emissions to reach the goal of carbon neutrality. While the detailed legislative framework is still unfolding by way of secondary legislation, it is already becoming clear that the emerging legal package will be complex. This chapter addresses four implementation challenges relating to small consignments, data collection, verification of the embedded emissions, and the way the CBAM price will be set. The chapter identifies practical shortcomings and offers policy suggestions.