Carbon leakage occurs when companies move production to countries with weaker climate regulations to avoid carbon costs. This can increase global emissions and is a key concern in energy-intensive sectors like steel or cement. Policies like CBAM aim to prevent this risk.
The EU has identified carbon leakage as one of the primary challenges in its climate policy framework. Sectors at high risk include iron and steel, aluminium, cement, fertilisers, and electricity generation. To address this, the Carbon Border Adjustment Mechanism places a carbon price on imports, ensuring that foreign producers face equivalent costs to EU manufacturers under the Emissions Trading System. This levels the playing field while maintaining the EU's climate ambitions.
Learn more about CBAM and carbon leakage prevention, use the CBAM cost calculator to estimate your import costs, and explore how to measure and reduce your carbon footprint.
See how Coolset helps companies with CBAM compliance and carbon leakage risk management →
