In March 2021, the European Parliament approved a specific proposal for the introduction of a WTO-compatible Carbon Border Adjustment Mechanism (CBAM), a key element to support the European Green Deal and a real game changer for climate policy.
The objective of the CBAM is to fight climate change and to support the EU’s climate objectives, by addressing the risk of carbon leakage and incentivizing investments in green and energy efficient technology.
In this paper, we explain and analyze the European Parliament proposal for the design of a WTO-compatible CBAM for the European Union.