The European Union has agreed on the final version of its Carbon Border Adjustment Mechanism (“CBAM”). The CBAM will apply to a limited set of products (cement, aluminium, fertilisers, electric energy production, hydrogen, iron and steel, as well as some “precursors” such as cathode active materials and a limited number of downstream products) which are vulnerable to carbon leakage. Initially, beginning in October 2023, a reporting obligation will apply, following which—in 2027—imports of covered products will be subject to the requirement to surrender of “CBAM certificates” (over calendar year 2026). For more details, see our Legal Update.