On April 25, 2023 The Council of the European Union adopted five laws that will enable the EU to cut greenhouse gas emissions within the main sectors of the economy, while making sure that the most vulnerable citizens and micro-enterprises, as well as the sectors exposed to carbon leakage, are effectively supported in the climate transition.
The laws are part of the ‘Fit for 55’ package, which sets the EU’s policies in line with its commitment to reduce its net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels and to achieve climate neutrality in 2050.
Carbon Border Adjustment Mechanism
The Carbon Border Adjustment Mechanism (CBAM) is a mechanism which concerns imports of products in carbon-intensive industries. The objective of CBAM is to prevent – in full compliance with international trade rules – that the greenhouse gas emissions reduction efforts of the EU are offset by increasing emissions outside its borders through the relocation of production to EU countries where policies applied to fight climate change are less ambitious than those of the EU or increased imports of carbon-intensive products.
Source International Tax Plaza
