In many countries, CBAM is also increasing interest in renewable energy and green industrial processes. Some see this not as a threat, but as an opportunity to attract investment and establish itself as a low-carbon manufacturing hub.
However, this mechanism is still controversial. For businesses, CBAM is complex and administratively burdensome. Firms need robust systems to measure embedded emissions, collect data from suppliers, and prepare environmental product declarations. Many will also be required to sign new renewable energy contracts to cut their carbon footprint.
CBAM has faced severe criticism around the world. India and China describe this as “green protectionism”, arguing that it puts undue pressure on developing economies. Also, the EU has not yet created dedicated funding to help exporters in low-income countries adapt. Without this support, the system cannot achieve the desired results.
What about consumers?
Although the CBAM is primarily aimed at industry, its impact will extend to consumers in the EU. Importers are unlikely to absorb the entire additional cost, meaning prices are likely to rise – especially for items that are heavily dependent on steel, aluminum or cement. This could mean that Europe could see higher costs of cars, household appliances, electronics, construction materials and, indirectly, food production (through fertilizers).
Also, CBAM can bring more transparency. Because importers must report the emissions contained in their goods, consumers can finally have clear information about the climate impact of what they buy.
This mechanism would also generate EU revenue from certificate sales. These are expected to support vulnerable households in many European countries, as well as finance clean technologies and improve energy efficiency. How the money is used will be key to public acceptance of Europe’s new carbon tax.
Even before full implementation, CBAM is already reshaping supply chains and influencing government policies beyond Europe’s borders. This could lead to trade disputes, push exporters to adopt carbon pricing, and highlight the need for more climate finance to support developing countries undergoing a green industrial transition.
For many European consumers, this could mean gradually increasing prices – and potentially, more climate-conscious purchasing decisions. Behind the scenes, it marks a significant shift in how global business accounts for carbon – and how climate policy reaches people’s everyday lives.
Simona Sagon, PhD Candidate, Green Finance, Lund University; University of Palermo. This article is republished from The Conversation under a Creative Commons license. Read the original article.
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