EU-ETS phase-out and CBAM phase-in outlook 2025-2034
Free allowances in the EU-ETS are to be phased out gradually from 2026 and will end by 2034. These free allowances are to be replaced with the world's first carbon border levy, which will take effect in 2026. The newly adopted carbon border adjustment mechanism (CBAM) will initially apply to imports of several carbon intensive products that are at the most risk of carbon leakage, such as iron and steel, cement, aluminum, and electricity, therefore making foreign firms and competitors pay the same carbon price as European industries. The CBAM phase-in plan will cease EU-ETS freely allocated allowances over a nine-year period.
