What Are Carbon Border Adjustments?

Written By Teacher: Liz Ransom

As a High School Spanish teacher and student newspaper advisor, Liz has taught for over 20 years and has served as World Languages Department Chair and K-6 summer camp activities leader. She has worked in Ohio, Maine, New Jersey, Maryland, and Chile.

Whether delving into the topic of global emissions, learning about the Paris Climate Accord, or considering how to enact global climate solutions, your students might wonder how carbon emissions can be reduced when products cross borders. For example, what mechanisms can be put into place to incentivize producers and consumers to prioritize products with lower carbon emissions? How can countries cooperate to ensure these policies and practices are fair, both domestically and within global trade? Carbon border adjustments (CBAM), explained here as well as in these articles from the Council on Foreign Relations, can be used by students preparing for role-plays or debates, or when defending their claims in this Ecocide unit on international law. Discussion about CBAM can also supplement this lesson on the fashion industry or this Spanish unit about the fishing industry.

Written By: MIT Environmental Solutions Initiative

The MIT Climate Change Engagement Program, a part of MIT Climate HQ, provides the public with nonpartisan, easy-to-understand, and scientifically-grounded information on climate change and its solutions.

A carbon border adjustment mechanism (CBAM) is a policy that charges a fee for imported goods based on how much climate pollution was created making them. CBAMs are always paired with carbon prices, which tax domestic goods for their climate pollution.

A carbon border adjustment can be broken down word by word: it puts a price on the carbon (carbon dioxide, or other climate-warming greenhouse gases) created by goods that cross the border, as an adjustment to put imported goods on a level playing field with domestic goods.

Why add a carbon fee to imports?

The idea of a carbon price is simple. By making goods that emit lots of carbon more expensive, the price nudges buyers to find cleaner alternatives, and manufacturers to make them.

But countries that enact carbon prices are hit with a problem. The price only applies to their own citizens and manufacturers. Climate-polluting goods from other countries get an unfair advantage, which can hurt domestic industries. This can also cause “carbon leakage,” in which buyers, instead of seeking out clean products, just buy untaxed climate-polluting goods from abroad.