Full form of CBAM is Carbon Border Adjustment Mechanism

The Carbon Border Adjustment Mechanism is an environmental policy tool designed to curb carbon emissions by imposing a carbon price on imported goods. It is primarily used in industries with a high carbon footprint, such as steel, cement, and aluminum, to prevent companies from relocating production to countries with less stringent climate policies, a practice known as 'carbon leakage.' By leveling the playing field, CBAM encourages global industries to adopt greener practices and fosters fair competition. This mechanism is significant because it aligns international trade with environmental sustainability goals, encouraging countries to transition towards low-carbon economies. CBAM is gaining traction in policy discussions, particularly in regions committed to reducing greenhouse gas emissions to combat climate change.