In December 2025, the EU adopted several implementing regulations governing the definitive (obligation) phase of the Carbon Border Adjustment Mechanism (CBAM), as well as a proposal to extend CBAM’s scope in the future. Several key provisions of this extensive regulatory package (approx. 5,000 pages) apply across all EU Member States as of 1 January 2026.

The Carbon Border Adjustment Mechanism (CBAM) is an EU instrument aimed at preventing carbon leakage, meaning the shifting of emissions outside the EU. Carbon leakage refers to a situation where companies operating within the EU transfer their carbon-intensive production to countries with looser climate policies than the EU, or when products manufactured in the EU are replaced by imported products with a larger carbon footprint.