What is the relationship between CBAM and the EU Emissions Trading System (ETS)?

CBAM as an extension of ETS principles to imports

CBAM is designed to work in parallel with the EU ETS, essentially extending similar carbon pricing principles to imported goods.

The price of CBAM certificates is set to mirror the price of EU ETS allowances, ensuring that imported goods face equivalent carbon costs to those produced in the EU.

As free allowances under the ETS are phased out for CBAM sectors, the CBAM obligation will be progressively phased in.

This close alignment between CBAM and ETS is crucial for maintaining consistency in the EU's climate policy and ensuring fair treatment of domestic and imported goods.