Think of CBAM as a carbon toll booth at Europe’s border. It applies a carbon tax to certain goods imported into the EU, ensuring that imported goods, particularly those at the greatest risk of carbon leakage, face similar carbon-related costs to those produced within the EU. The framework works in two steps. First, EU importers must measure and report the carbon emissions embedded in the goods they bring in. Then, from January 2026, they will be required to pay. Illustration