Over the past year, most countries have shifted from a cautious and wait-and-see stance on the Carbon Border Adjustment Mechanism (CBAM) to a proactive one.
The International Emissions Trading Association (IETA) reported on these striking developments, political changes, and the response to the EU CBAM by the major economies covered by the mechanism in its report “The Evolution of the Global Community's Response to the EU CBAM.”
Experts compared the results of this year's review with the conclusions of last year's IETA report, which recorded the initial reactions of countries to the newly created EU CBAM. They found that many countries are introducing or strengthening carbon pricing mechanisms, with emissions trading systems (ETS) becoming the preferred tool, and in some cases, countries are developing their own carbon adjustment measures for imports.
What has changed over the year
With the start of the CBAM transition phase in October 2023, the global context in which this mechanism operates has changed. The international implications of CBAM have become more apparent against the backdrop of a changing geopolitical and economic environment.
The return of US President Donald Trump's administration in early 2025 created uncertainty in global climate and trade policy. Recall that withdrawing from the Paris Agreement was one of the first decisions made by the newly elected president.
At the same time, the Russian-Ukrainian war continues to change the EU's geopolitical position, reinforcing its long-term commitment to energy diversification, security of supply, and industrial resilience.
The growing intersection of trade and climate regulation has caused tension in several multilateral forums. Russia's recent initiation of an official trade dispute against the EU CBAM is the first direct challenge to this mechanism. Its outcome could significantly affect the perception of CBAM in international trade law.
The key question at stake is whether CBAM will be considered an environmental protection measure or a form of discriminatory trade barrier.
National emissions trading systems
Experts note that developing countries are becoming increasingly involved in carbon pricing policies. As of January 2025, there are 38 ETSs in operation worldwide, covering nearly 20% of global greenhouse gas emissions, one-third of the world's population, and 58% of global GDP.
The report states that the largest developing economies, such as Brazil, India, and Turkey, have accelerated their efforts to establish carbon pricing mechanisms. China's national ETS is moving toward absolute emissions caps. Seventeen of the G20 countries already have or are planning to establish ETSs.
“These developments are crucial, as the international response to CBAM will depend in part on whether the EU's major trading partners make convincing progress in creating their own climate emissions pricing instruments,” experts say.
Reactions to CBAM in different countries
According to the IETA report, countries such as Australia, Canada, and the US are considering introducing their own national CBAMs. South Korea is strengthening its domestic emissions trading system to offset the costs of CBAM. Turkey is currently in the process of creating a national ETS.
Conversely, Brazil, Russia, China, and India are showing varying degrees of resistance to the introduction of CBAM.
IETA analysts devoted a separate section of the report to Ukraine. They noted that our country is looking for ways to mitigate the economic risks associated with CBAM. Thus, at the end of May this year, the Ukrainian Economic Development Committee appealed to the Prime Minister to start negotiations with the European Commission on a temporary exemption from the financial components of the EU CBAM for the duration of martial law and for at least five years after it. The committee also called on the Ministry of Economy of Ukraine to be authorized to conduct negotiations once they begin.
It should be noted that there are only six months left before the final phase of CBAM, which will begin on January 1, 2026. This makes 2025 a crucial year for finalizing and evaluating the simplifications to the mechanism proposed in February.
Experts believe that the coming months will focus not only on the implementation of CBAM and the simplification of reporting requirements, but also on preparations for the expected expansion of its scope, which the European Commission will propose at the end of 2025.
As EcoPolitic recently reported, the European Parliament and the Council of the EU have agreed to the European Commission's proposal to simplify CBAM.
