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Steel exporters to the EU started paying for the CO2 emissions linked to their production from the beginning of 2026. <\/p>\n
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In a major shake-up of green trade rules, the European Union began charging a carbon-emissions tax on imported goods such as steel and cement at the beginning of this year. Here\u2019s how and why this first-of-its-kind policy, known as a Carbon Border Adjustment Mechanism (CBAM)External link<\/a>, is already reshaping climate practices far beyond the EU. <\/p>\n This content was published on <\/p>\n January 23, 2026 – 09:00\n<\/p>\n \n Simon Bradley <\/p>\n \n I am a climate and science\/technology reporter. I am interested in the effects of climate change on everyday life and scientific solutions. Switzerland\u2019s approach to the new tax has been cautious. The non-EU country is exempt from the CBAM but will reassess its position on this type of carbon tax scheme this year. Developing countries meanwhile have warned that the EU\u2019s scheme is unfair. And while the CBAM is already having an effect, its long-term success will depend on whether it pushes other countries to adopt their own schemes for pricing carbon.<\/p>\n What is the EU\u2019s carbon border levy and how does it work?<\/p>\n Initially, the tax applies to cement, iron, steel, aluminium, electricity and hydrogen that come into the EU at certain amounts. Reuters has reported that the EU plans to expand the tax to car parts, refrigerators and washing machines from January 1, 2028.<\/p>\n Instead of paying a tax directly, importers of these goods must buy CBAM certificates, which reflect the emissions embedded in their products. Under the CBAM system, a German carmaker importing steel from a non-EU country without carbon pricing, such as Turkey, must calculate the emissions embedded in the steel and the shipment, and buy the corresponding number of CBAM certificates. If the exporting country already prices carbon, the EU charges only the difference.<\/p>\n The CBAM builds on the EU\u2019s existing carbon pricing system. Since 2005, heavy emitters inside the bloc have been required to pay for their emissions under the EU Emissions Trading System (EU ETS).External link<\/a> CBAM certificate prices are linked to the EU ETS carbon price.<\/p>\n + Switzerland and EU link carbon emissions trading systems<\/strong><\/a><\/p>\n The phasing in of the new levy coincides with the phasing out of free carbon allowances that have been offered to polluting sectors covered by the EU ETS deemed at risk of \u201ccarbon leakage\u201d \u2013 the relocation of emissions-heavy production abroad to avoid the region\u2019s strict climate policies \u2013 and to help the sectors transition to carbon pricing.<\/p>\n Why has the EU introduced this CO2 levy?<\/p>\n CBAM is part of the EU\u2019s Green DealExternal link<\/a>, policy initiatives launched in 2019 to make Europe climate neutral by 2050.<\/p>\n The EU says the adjustment mechanism will help cut emissions\u00a0and protect carbon-intensive EU industries from unfair competition with producers in countries with weaker climate rules. It is also meant to discourage \u201ccarbon leakage\u201d.<\/p>\n The bloc also argues that CBAM encourages greener practices globally, as countries can avoid paying the levy by imposing an equivalent carbon price on domestic production.<\/p>\n What will be the impact of this levy?<\/p>\n Supporters say CBAM represents a major shift in global trade by embedding climate policy into trade rules and encouraging firms to decarbonise.<\/p>\n Catherine Wolfram, professor of energy\u00a0economics\u00a0at the\u00a0MIT Sloan\u00a0School of Management, calls itExternal link<\/a> the most optimistic\u201d development she has seen in 20 years of studying climate policy.<\/p>\n The policy appears to be influencing governments worldwide. Aurora D\u2019Aprile of the Swiss-based International Emissions Trading Association told the AFP news agency there had been a \u201cclear step change\u201d in reaction over the past year, with countries including China expanding carbon pricing and others, such as Turkey, launching long-delayed emissions trading schemes.<\/p>\n Japan has explicitly cited CBAM in advancing its policies, while the UK plans its own mechanism from 2027. Australia, Canada and Taiwan are also considering or extending carbon pricing.<\/p>\n The EU\u2019s own assessment projects that the CBAM would result in a\u00a013.8% reductionExternal link<\/a>\u00a0in the bloc\u2019s emissions by 2030, compared with 1990 levels, and a cut of about 0.3% for the rest of the world.<\/p>\n What is Switzerland\u2019s position on the levy?<\/p>\n Swiss goods are currently exempt from CBAM because Switzerland\u2019s emissions trading system has been linked to the EU since 2020. This means that companies effectively pay a comparable carbon price, with the linkage allowing mutual recognition of emission allowances and equal treatment under both systems. Switzerland is not required to introduce the CBAM under a bilateral ETS agreement.<\/p>\n In 2023, the Swiss authorities advisedExternal link<\/a> against introducing an EU-style adjustment mechanism for imported goods, citing costs and regulatory and commercial risks. The CBAM \u201cwould also only benefit a small number of carbon-intensive industrial facilities in Switzerland, while generating disadvantages for the rest of the economy,\u201d the federal government said.<\/p>\n But the issue continues to occupy lawmakersExternal link<\/a>. In October 2025, a parliamentary committee adopted an initiative to create a Swiss border adjustment mechanism for cement-related importsExternal link<\/a>. A consultation on draft legislation runs until February 20, 2026. Federal authorities also plan to re-assess by mid-2026 whether to introduce a broader Swiss CBAM, following an interim evaluation of the EU scheme.<\/p>\n Separately, Switzerland has a federal CO\u2082 levy, essentially a national carbon tax on fossil fuels like heating oil and natural gas, set at CHF120 per tonne of CO\u2082, which incentivises reducing fossil fuel use. Most revenue is redistributed to citizens and businesses, and a portion funds building efficiency and renewables. It also has carbon pricing on vehicle imports and an Emissions Trading System (ETS) for large emitters, aiming to meet its net-zero goals. \u00a0<\/p>\n Which countries oppose the EU levy?<\/p>\n Countries most affected by the tax argue it will raise costs, restrict trade and slow economic growth.<\/p>\n graph <\/p>\n UNCTAD based on UN COMTRADE. <\/p>\n Despite expanding carbon pricing, China\u2019s commerce ministry has described the levy as \u201cunfair\u201d and \u201cdiscriminatory\u201d, warning it could undermine trust and raise the cost of climate action for developing countries. It has vowed to take countermeasures, and the issue was raised for the first time at the COP30 climate meeting in Brazil last November following pressure from a group of nations.<\/p>\n India, Russia and Brazil have also strongly opposed CBAM, calling it a unilateral trade measure disguised as environmental policy.<\/p>\n The United Nations Conference on Trade and Development (UNCTAD) says the EU must carefully consider the trade impacts of the CBAM. It says the mechanism could help avoid carbon leakage, but its impact on climate change would be limited \u2013 only a 0.1% drop in global CO2 emissions \u2013 with higher trade costs for developing countries. With a CBAM based on a carbon price of $44 per tonne, for example, the income of developed countries would rise by $2.5 billion, while that of developing nations would fall by $5.9 billion, according UNCTAD\u2019s analysisExternal link<\/a> published last July.\u00a0<\/p>\n Georg Zachmann, a climate policy specialist at the Brussels-based think tank Bruegel views the CBAM as a \u201cpolitical success for the EU\u201d and says its long-term impact will depend on whether other countries respond by introducing effective carbon pricing or similar mechanisms.<\/p>\n Why is there no universal carbon pricing system?<\/p>\n In an ideal world, all countries would price carbon emissions, says Philippe Thalmann, professor of environmental economics at the Federal Institute of Technology Lausanne (EPFL). In reality, many governments resist such measures out of concern for economic growth.<\/p>\n \u201cThis European policy of punishing them in a certain way, or at least restoring a level playing field when they export their goods to the EU, is a softer answer than forcing them to have a carbon price on all their production,\u201d he told Swissinfo.<\/p>\n Thalmann nonetheless believes CBAM is the right tool. \u201cAll steel production should be subject to carbon pricing around the world. And the CBAM system is a way of extending the European price to other countries. I think Switzerland should participate in this effort,\u201d he said.<\/p>\n \n More<\/p>\n More <\/p>\n Emissions reduction\n <\/p>\n Why Switzerland\u2019s carbon footprint is bigger than you think <\/p>\n This content was published on <\/p>\n Jan 23, 2025 <\/p>\n Per capita CO2 emissions in Switzerland are lower than the world average. But the picture changes radically when you consider the emissions related to products imported from abroad. <\/p>\n![\"\"](\"https:\/\/www.europesays.com\/uk\/wp-content\/uploads\/2026\/01\/simon-bradley-profileImage-42391095.png\")
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\nBorn in London, I am a dual citizen of Switzerland and the UK. After studying modern languages and translation, I trained as a journalist and joined swissinfo.ch in 2006. My working languages are English, German, French and Spanish. <\/p>\n\n
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