Conditioning access to the European Union market on carbon footprint: the Carbon Border Adjustment Mechanism

The European Union (EU) is using different trade instruments to promote global decarbonization, including unilateral measures to condition the access to the EU’s market of certain products originating from third countries depending on their carbon footprint. This chapter is devoted to the recently adopted Carbon Border Adjustment Mechanism (CBAM), aimed at reducing the risk of the so-called carbon leakage. The logic of this measure is that EU importers of certain products originating in third countries (such as steel, aluminium, cement…) will have to acquire public certificates (CBAM certificates) for carbon emissions embedded in imported goods, based on the real emissions released during the production process in the country of origin. The EU CBAM is very original, because to date no country has implemented a big measure of this kind. But the EU CBAM is also very controversial, as certain countries (mainly emerging economies) question whether it can be compatible with the multilateral trading system and with some global rules on climate change, such as the principle of common but differentiated responsibilities. This chapter will therefore delve into the currently heated debate on the legal compatibility of the EU CBAM with these international regimes, observing also its systemic implications.