REUTERS/Kuba Stezycki Acquire Licensing Rights Under CBAM, foreign producers will need to keep track of the fossil fuel emissions in their products and provide this information in verifiable form for the EU authorities. Indeed, Turkey has recently announced a move to impose carbon prices, in a kind of turbocharged “Brussels effect”. Firms that must comply with the EU rules lobby their governments to impose similar rules so that they do not have to contend with varying overlapping regulatory requirements. By virtue of the size and importance of the EU market, unilateral EU regulation in this area, as in deforestation and other areas, sets the agenda for the world, and gives the EU a first-mover advantage. This structure might be viewed as coercive. States that export to the EU will have strong incentives to impose their own price-based measures in order to avoid transferring money to the EU: the CBAM is reduced by carbon costs charged in the exporting state.
An internationally agreed system of equivalence is needed to ensure appropriate respect for non-price means of reducing emissions.
Furthermore, the CBAM does not give credit to non-price methods of reducing emissions, such as the subsidies of the U.S.