The EU’s Carbon Border Adjustment Mechanism: Implications for exporters and governments in non-EU countries

The EU’s Carbon Border Adjustment Mechanism (CBAM) is reshaping the terms of trade for companies exporting carbon-intensive goods into the European market. By pricing the embedded emissions of imports to match the EU’s own carbon price, CBAM aims to prevent carbon leakage – but it also places new reporting and compliance burdens on exporters and policymakers far beyond EU borders.

Climate Focus developed this legal brief to unpack what CBAM means for non-EU exporters and governments as the mechanism continues to evolve. It examines how compliance will depend on exporters’ ability to measure, report, and verify emissions, and to document the carbon price already paid at home. It also explores the open questions EU institutions are still resolving – including how carbon credits, including those under Article 6 of the Paris Agreement, will factor into CBAM liability calculations.

Crucially, the brief sets out where non-EU governments still have room to shape outcomes: through direct engagement with EU institutions, support for domestic industry readiness, and policy choices – from carbon pricing reform to anchoring carbon credits in domestic law – that can cushion CBAM’s impact while advancing climate goals at home.

Read the brief in your browser here or download the PDF below.