The EU has a transformative mechanism to reduce carbon leakage, but challenges loom ahead

When companies face steep carbon prices in a country, they often move production to places with lower or no pricing. To address this problem, the European Union created the Carbon Border Adjustment Mechanism. But, for developing countries, the mechanism imposes trade barriers that could stifle their growth and green transition. Ram Smaran Suresh Kumar breaks down the policy’s key features, examining its challenges and opportunities for a sustainable future.