International carbon credits in Europe’s CBAM: what’s allowed?

The EU Commission’s new draft Implementing Act for Europe’s Carbon Border Adjustment Mechanism (CBAM) appears to open for international credit use as a way for importers to pay for the emissions embedded in their goods. It refers to a 10% limit on international credits under Article 6 of the Paris Agreement that could give the impression that importers may directly apply money spent on carbon credits toward the cost of CBAM certificates. In fact, the draft Act does not allow this, rather including credits only to the extent that they are already part of third countries’ mandatory carbon pricing systems.