“CBAM” stands for Carbon Border Adjustment Mechanism and is one of the key elements of the European Union’s (“EU”) “Fit for 55”-package. The CBAM’s main objectives are to avoid carbon leakage, contribute to the EU’s goal to be climate neutral and encourage partner jurisdictions to “decarbonize” their production processes by leveling the playing field in carbon-pricing between the EU and third-country producers. The CBAM is a border adjustment mechanism for CO2-emissions that aims to ensure that the cost of those emissions is adequately reflected in the price of products imported into the EU.
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