The European Commission is consulting on draft rules for the Carbon Border Adjustment Mechanism (CBAM). The proposal allows importers to deduct domestic carbon prices paid in third countries from their EU obligations, while capping the use of international credits (ITMOs) at 10% to prevent low-quality offsets from undermining the system. This move provides much needed clarity for global suppliers on how domestic carbon taxes and emissions trading systems convert into CBAM deductions. It also signals a shift in the EU's approach to international credits under Article 6 of the Paris Agreement, balancing market access with environmental integrity.
