Ursula von der Leyen, the new President of the European Commission, already introduced the
notion of creating a carbon border adjustment mechanism (CBAM) as part of the “European
Green Deal” when she made her first major speech to the European Parliament. The idea is to
impose a charge initially on selected imports that generate emissions during their production in
other countries, but are subject to lower environmental standards there than those in the EU. This
should compensate for what is known as “carbon leakage” (i.e. outsourcing economic activity to
avoid higher environmental standards) and competitive disadvantages for European companies
resulting from stricter CO2 requirements and higher prices of CO2 (by global comparison).