Carbon Border Adjustment Mechanism of the European Union: a New Tool of Global Governance

Abstract

In 2021, the European Union presented unilaterally and without agreement with international community partners a Carbon Border Adjustment Mechanism (CBAM). It includes a system own monitoring and control of production processes in third country companies in relation to greenhouse gas (GHG) emissions. The article attempts to analyze CBAM as a new, emerging phenomenon of global governance, and offer recommendations for improvement its concept. It is shown that CBAM is a global in its scope, but its legitimacy is in serious doubt. The EU has no legitimate grounds for making requirements for environmental cleanliness and carbon footprint of goods produced abroad. The right to make such demands is not enshrined in fundamental international environmental documents such as the UN Framework Convention on Climate Change (UNFCCC) and the Paris Agreement. EU importers do not have any information about the volumes of greenhouse gas emissions embodied in imported products. Only foreign manufacturers have such data. The European Union control for foreign manufacturers proposed in CBAM undermines the exclusive right of a third-country governments to control and regulate national enterprises including greenhouse gas emissions. The EU does not have a mandate established by both international community and external to the Union countries to monitor and control the “carbon footprint” in companies of foreign jurisdiction. It is concluded that CBAM has all the signs of discrimination, protectionism, restrictions on competition in the environmental and industrial sphere in relation to exporters from third countries. It is necessary to work out a better proposal and make political and diplomatic efforts to avoid CBAM creating unnecessary conflicts with other countries. Any new rules of global climate policy and regulation should be formulated only under the auspices of the UN.