00:00The EU's carbon border tax on heavy industry goods goes into effect on the 1st of January.
00:05Importers of specific goods in the EU now have financial obligations to pay a carbon price similar to EU products.
00:13The Carbon Border Adjustment Mechanism, or CBAM, applies to imports of carbon-intensive goods such as iron and steel, aluminium, cement and fertilizers.
00:23So what the CBAM does is apply average carbon prices paid by the EU through the ETS and the importers will then need to buy CBAM certificates at a similar price to cover their emissions and that resource the playing field between the importers and the European producers.
00:48The CBAM is meant to protect European manufacturers from unfair foreign competition.
00:54European producers pay a carbon price through the Emissions Trading System, or ETS, which other producers don't.
01:02Hence, the CBAM aims to prevent carbon leakage by stopping EU producers from relocating their industries abroad where they don't face similar costs.
01:11Some countries, such as China and India, have accused the EU of protectionism and say the law will hurt trade.
01:18European producers from the EU.
