EU's Carbon Border Tax Raises Concerns for Businesses

Businesses are rightfully concerned about the unknown administrative and economic impacts of the EU's new CBAM policy. Reporting requirements are extensive and compliance costs will be high.

There are open questions about whether CBAM complies with WTO rules, which could trigger retaliatory trade measures.

It is unclear how carbon price equivalency with non-EU countries will be determined under CBAM, which leaves the potential for double taxation.

CBAM is designed to pressure non-EU firms through fear of carbon costs, yet its effectiveness at reducing emissions is questionable.

Reassurances from EU officials that firms have nothing to fear from CBAM contradict the policy's intent to encourage changes through imposing costs.