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    Question

    What is the EU's Carbon Border Adjustment Mechanism

    (CBAM)?
    A A tool to put a tax on all imports entering the EU Correct Answer Incorrect Answer
    B A mechanism to phase out the EU's Emissions Trading System (ETS) Correct Answer Incorrect Answer
    C A system to allocate free allowances to non-EU countries for cleaner industrial production Correct Answer Incorrect Answer
    D A tool to put a fair price on the carbon emitted during the production of certain carbon intensive goods entering the EU Correct Answer Incorrect Answer
    E A mechanism to increase the production of non-carbon intensive goods in non-EU countries Correct Answer Incorrect Answer

    Solution

    The EU’s Carbon Border Adjustment Mechanism (CBAM) is a landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries. The gradual introduction of the CBAM is aligned with the phase-out of the allocation of free allowances under the EU Emissions Trading System (ETS) to support the decarbonisation of EU industry. The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. With this enlarged scope, CBAM will eventually – when fully phased in – capture more than 50% of the emissions in ETS covered sectors. Under the political agreement, the CBAM will enter into force in its transitional phase as of 1 October 2023. About European Union The European Union is a supranational political and economic union of 27 member states that are located primarily in Europe. Founded: 1 November 1993

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