In many countries, CBAM is also accelerating interest in renewable energy and greener industrial processes. Some see it not as a threat, but as an opportunity to attract investment and position themselves as low-carbon production centers.
However, this mechanism is still controversial. CBAM is complex and administratively difficult for companies. Companies need robust systems to measure embedded emissions, collect data from suppliers and prepare environmental product declarations. Many will also need new renewable energy contracts to reduce their carbon footprint.
CBAM has faced intense criticism around the world. India and China describe it as 'green protectionism', arguing it puts unfair pressure on developing economies. At the same time, the EU has not yet created specific financing to help exporters in low-income countries adapt. Without this support, the mechanism may not achieve the desired results.
What about consumers?
Although CBAM is mainly aimed at industry, its ripple effects will reach EU consumers. It is unlikely that importers will be able to absorb the full additional costs, meaning prices are likely to rise, especially for goods that rely heavily on steel, aluminum or cement. This could mean that Europe sees higher costs for cars, household appliances, electronics, building materials and, indirectly, food production (via fertilizers).
At the same time, CBAM can provide more transparency. Because importers must report the emissions of their goods, consumers can ultimately get clearer information about the climate impact of what they buy.
The mechanism will also generate EU revenue from the sale of certificates. These are expected to support vulnerable households in many European countries, finance clean technologies and improve energy efficiency. How the funds are used will be crucial for public acceptance of the new European carbon tax.
Even before full implementation, CBAM is already reshaping supply chains and influencing public policy far beyond the borders of Europe. It could spark trade conflicts, push exporters to adopt carbon pricing and highlight the need for more climate finance to support developing countries undergoing a green industrial transition.
For many European consumers, this is likely to mean a gradual increase in prices – and possibly more climate-conscious purchasing decisions. Behind the scenes, it marks a major shift in the way global trade takes carbon into account – and how climate policy impacts people's daily lives.
Simona Sagone, PhD candidate, Green Finance, Lund University; University of Palermo. This article is republished from The Conversation under a Creative Commons license. Read the original article.
