The Europe Desk Understanding the Carbon Border Adjustment Mechanism
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Mar 29, 2022 
Dr. Mohammed Chahim, a Member of the European Parliament for the Dutch Social Democrats and rapporteur for the Carbon Border Adjustment Mechanism (CBAM), dives into the intricacies of this pivotal climate initiative. He discusses its role in balancing competition between EU and non-EU producers and preventing carbon leakage. Chahim emphasizes the importance of fair carbon pricing and international cooperation. Additionally, he highlights how innovative technologies and legislative processes are crucial for achieving sustainability and tackling climate change effectively.
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CBAM's Role in Carbon Leakage
- The Carbon Border Adjustment Mechanism (CBAM) is a new carbon leakage measure substituting free allowances under the EU Emission Trading System.
- It incentivizes producers outside the EU to either pay a tax or reduce their carbon footprint for equal treatment and climate goals.
Expand Scope and Use Revenues Wisely
- Expand CBAM scope to include chemicals, hydrogen, and polymers to cover more carbon-intensive, tradable sectors.
- Use revenues from CBAM to fund climate finance for least developed countries, emphasizing global cooperation over revenue generation.
Robust Carbon Accounting Standards
- CBAM carbon accounting relies on international databases and lifecycle analysis standards to ensure fairness.
- Importers can prove their actual production emissions with independent verification to avoid overpayment.