Brief description of the Mechanism for Adjusting the Carbon Border (CBAM)

In Agile Advisors as a Carbon Border Adjustment Mechanism, As proposed by the European Commission, a Carbon Border Adjustment Mechanism (CBAM) would help reach climate neutrality by 2050. It would respond to the dangers of "carbon leakage" brought on by the EU's higher climate commitment in concert with the other policy instruments in the "Fit for 55" package. The hypothetical scenario known as "carbon leakage" refers to European producers competing in global markets, shifting their output and emissions to nations with laxer or no climate regulations to reduce the cost of compliance. With time, carbon leakage mitigation strategies such as the EU Emissions Trading System's free emission allowance distribution will give way to CBAM. For a limited number of items, it guarantees a carbon price equal to domestic and imported production. It would also incentivize trading partners to lower their emissions in this way.