In this episode of State of Sustainability, we explore the Carbon Border Adjustment Mechanism (CBAM), one of the most significant developments in climate policy, carbon pricing and international trade. As the European Union begins implementing CBAM, businesses around the world are assessing what the new regulations mean for imports, exports, supply chains and decarbonisation strategies.
We break down how CBAM works, why it was introduced, and which industries are expected to feel the greatest impact. From steel and cement to fertilisers, aluminium and hydrogen, the mechanism is designed to prevent carbon leakage and ensure imported products face similar carbon costs to those produced within the EU.
The discussion explores the latest CBAM carbon certificate pricing, the potential impact on global trade flows, and the challenges businesses face as they adapt to new reporting and compliance requirements. We also examine concerns around competitiveness, trade barriers and whether CBAM could accelerate the global adoption of carbon pricing systems.
The episode looks at how major economies, including China and the United States, are responding to Europe's carbon border tax, and whether similar mechanisms could emerge elsewhere. We discuss the implications for emissions trading schemes, green steel production, industrial decarbonisation and the future of sustainable manufacturing.
Topics covered in this episode include:
• What the Carbon Border Adjustment Mechanism (CBAM) is and why it was introduced
• How CBAM is designed to prevent carbon leakage and support EU climate goals
• The industries most affected, including steel, cement, fertilisers, aluminium, hydrogen and electricity
• The latest CBAM carbon pricing and what it means for exporters
• The potential impact on international trade and global supply chains
• Whether CBAM creates a level playing field or acts as a trade barrier
• How China is responding through the development of its emissions trading scheme
