European Parliament Approves CBAM Regulation

With 487 for-votes (compared to 81 against and 75 abstentions), the European Parliament approved on 18 April 2023 the rules of the new EU Carbon Border Adjustment Mechanism (CBAM). The Regulation, which now is awaiting formal adoption by the Council, informs importers and producers on how to calculate emissions and minimise the exposure to the carbon border price. It will affect both interconnected and remote electricity markets, due to its coverage of direct and indirect emissions of electricity and other commodities imported to the Union. In this article, we describe the main content of the CBAM Regulation applicable to the import and use of electricity, and how it may affect power and energy attribute certificate (EAC) markets in third countries.

CBAM

The CBAM will put a carbon price on certain goods that are imported into the EU/EEA internal market, by requiring importers (known as authorised CBAM declarant) to buy CBAM certificates based on the embedded emissions of imported goods. The price of …