{"id":7079,"date":"2023-11-03T10:17:14","date_gmt":"2023-11-03T00:17:14","guid":{"rendered":"https:\/\/news.sap.com\/australia\/?p=7079"},"modified":"2023-12-13T05:09:55","modified_gmt":"2023-12-12T19:09:55","slug":"why-europe-urgently-needs-cbam","status":"publish","type":"post","link":"https:\/\/news.sap.com\/australia\/2023\/11\/03\/why-europe-urgently-needs-cbam\/","title":{"rendered":"Why Europe Urgently Needs CBAM"},"content":{"rendered":"

Part 1 of the \u2018Tip of the Iceberg\u2019 series<\/em><\/h4>\n

The EU Carbon Border Adjustment Mechanism (CBAM<\/a>) marks the start of a new era by entering a transitional period in October 2023. This regulation is the first of its kind, as it will require importers to buy certificates for emissions generated outside the EU. This new regulation is urgently needed as a correction to the existing EU Emissions Trading Scheme (EU ETS<\/a>), and it is designed to have a global impact.<\/p>\n

Unintended Consequences<\/h2>\n

The ETS was also the first of its kind when introduced in 2005. It is still considered the EU\u2019s flagship policy to combat climate change and the world\u2019s largest carbon market. Although it successfully reduced<\/a> emissions by 41% in targeted sectors, it had some unintended consequences. With a carbon price<\/a> reaching a record high of EUR 100, the EU ETS placed a staggering EUR 40bn<\/a> financial burden on local producers in 2022.<\/p>\n

Consequently, the production of certain goods started to shift to countries with lower climate ambitions and lower, or no carbon prices. This phenomenon is called \u2018carbon leakage<\/a>\u2019 and it defeated the original intension of the ETS to reduce emissions.<\/p>\n

CBAM is therefore seen as a correction to the ETS, and its introduction will facilitate several linked objectives:<\/p>\n