The European Union is set to become the first regional bloc to implement a carbon border adjustment mechanism (CBAM) as a tool to mitigate the threat of carbon leakage. In doing so, the CBAM is taking centre stage in global discussions on climate and trade.
The EU has plans to impose this policy on countries that do not have a price on carbon or where the price is lower than in the EU. Since the US does not have carbon pricing at the national level, covered imports from the US are expected to be subjected to the mechanism, at least to some extent.
This briefing looks at the EU CBAM from a US perspective, a US CBAM, and CBAM alternatives.