CBAM - the green border of Europe

The CBAM (Carbon Border Adjustment Mechanism) regulation is not only a new trade rule, but above all an important step towards protecting our planet. Introduced on July 1, 2023, the law applies to companies outside the European Union that export their products to its countries. The mechanism covers sectors that produce or export goods such as cement, fertilizers, aluminum, steel and the like. Manufacturing companies. How does it work and why is it so crucial to our future? About that below.

Green duty

CBAM is a kind of "green tariffs" - a mechanism designed to balance global trade in greenhouse gas emissions. Companies from outside the EU, in order to bring their products to our market, must provide information on the amount of carbon dioxide emitted during their production process. This is not only a new bureaucratic requirement, but also an attempt to limit the relocation of production to regions with less stringent environmental requirements.

One of the key elements of CBAM is the so-called "border emission allowances." This is nothing more than a pollution fee. Companies must purchase a corresponding amount of these allowances at the European Union border. The more greenhouse gases emitted in the production process, the higher the cost. However, this fee should not be seen as a financial penalty, but also as a kind of incentive to increase emission reduction activities.

Why is CBAM so important?

These new requirements are not only aimed at protecting the planet, but also pose new challenges for global companies. Companies must operate more sustainably to maintain access to the European market. This in turn means that the products hitting our shelves will be more environmentally friendly. At the same time, CBAM stimulates investment in low-carbon technologies, which contributes to the development of an economy based on sustainable, more environmentally friendly, technologies. In addition, CBAM also has great potential to impact the global economy. Companies outside the EU have to adapt to the new rules, which could push them to produce more sustainably on a global scale (not just for the European market). This is a step toward a more sustainable economic model on a global scale that will take into account not only profits, but also pay more attention to its environmental impact.