On January 1, 2026 the European Union's carbon border adjustment mechanism became a bill, with 10,483 customs declarations checked in its first week, 98 percent of them iron and steel. No money changes hands until 2027, and the charge phases in to 100 percent by 2034. The episode covers India's trade deal, Russia's WTO case, and objections from developing nations, then tests whether a tonne, and a tree, can be priced.
Who's who
- Paula PinhoEuropean Commission spokesperson who said India gets no more favorable treatment
- Makis KeravnosCyprus finance minister who presented the Council's position on downstream goods
- Darpan JainIndian Additional Secretary who described the CBAM annex
- Jacob WerksmanEU negotiator who said trade disputes belong at the WTO
- Arthur Cecil Pigou+3 more episodesEconomist who described the uncharged chimney externality
- Carolyn FischerCo-author of the first peer-reviewed estimate of CBAM's trade effect
- Kimberly ClausingEconomist who co-wrote on carbon border policies as strategic complements
Where it happens
- European Union+2 more episodesBorder carbon charge took effect January 1, 2026
- India+2 more episodesConcluded a free trade agreement in January 2026 with no CBAM exemption
- Russia+3 more episodesComplainant in WTO dispute DS639
- China+2 more episodesExpanded its emissions trading system to steel, cement, and aluminum
- TürkiyeOne of the EU's largest CBAM suppliers by volume
- United Kingdom+2 more episodesPlans its own border mechanism starting January 2027
Timeline
- May 10, 2023The CBAM regulation is adopted.
- October 8, 2025The Omnibus amendment sets a 50-tonne threshold, exempting about 90 percent of importers.
- January 1, 2026The definitive period begins.
- July 24, 2026The EU blocks Russia's first WTO panel request in dispute DS639.
- February 1, 2027Certificate sales begin.
- 2034The border charge reaches 100 percent of the benchmark.
Still debated
Whether CBAM is climate policy or protectionism is argued: the EU points to origin-neutral rules, while BRICS ministers call it unilateral and punitive. Its WTO legality is asserted but undecided, and the 2026 charge is small by design.
