The European Commission’s proposal for a Carbon Border Adjustment Mechanism (CBAM) puts forward a policy measure to prevent carbon leakage from domestic energy-intensive and trade-exposed industries by leveling production costs of European and international markets. The pilot phase of the CBAM is expected to come into force in 2023. In the meantime, consultation and feedback will take place through which stakeholders have an opportunity to influence and improve the design of the CBAM.
From the perspective of Swedish climate ambitions and industry competitiveness, the authors put forward four important elements that will define the Swedish policy position on the CBAM proposal:
- the phase-out of free allowances,
- the exclusion of exports from its coverage,
- the scope of emissions covered, and
- crediting third countries’ climate policies.
This discussion brief explores how the CBAM proposal deals with these issues, the various options identified in the current policy debate, and Swedish stakeholders’ views on them.