Carbon Border Adjustment Mechanism
탄소국경조정제도
The EU's carbon tariff mechanism, fully operational from January 2026 after a transitional phase starting October 2023. It requires importers of carbon-intensive goods (steel, aluminum, cement, fertilizer, electricity, and hydrogen) to purchase certificates priced equivalently to the carbon costs borne by EU domestic producers under the Emissions Trading System (ETS). Designed to prevent carbon leakage (the relocation of emissions-intensive production outside the EU) and to incentivize trading partners to adopt carbon pricing, CBAM is projected to impose up to 1.9 trillion won in annual costs on Korean steel exporters by 2035 as free ETS allowances are phased out.
Sources
- Wikipedia (EN) CBAM definition, legislative history, phases, sectors covered, certificate pricing mechanism, and WTO compatibility
- taxation-customs.ec.europa.eu European Commission official page: definitive regime from 2026, transitional phase 2023–2025, six covered sectors, and operational procedures
- eiec.kdi.re.kr KDB Future Strategy Research Institute analysis of CBAM impact on Korean industry: certification cost burden projected to rise sharply from 2030; iron and steel sector most affected; need for emissions reduction and verification capacity