With Regulation (EU) 2023/956 of the European Parliament and Council of 10 May 2023, the Carbon Border Adjustment Mechanism or "CBAM" came into force as of 1 October 2023.
The new environmental policy mechanism established by the European Union is the expression and implementation of the "polluter pays" principle and it aims to apply to specific products imported within the customs territory of the European Union the same carbon emission costs that are incurred from production plants located within the European Union, already subject to the regulation of the Emission Trading System (“ETS”) with regard to numerous products.
In other words, CBAM entails the application of a price for the emissions incorporated in the imported products included in the scope of application of the aforementioned mechanism.
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