The Global CBAM Domino Effect – Who’s Next?

With fewer than fifteen months until the full implementation of the EU CBAM, international climate policy is entering a new phase. What began as a single regulatory instrument within the European Union is increasingly becoming a global blueprint. Policymakers around the world are analyzing the European model not only to understand its impact but increasingly to adopt it. For companies trading with or within the EU, this means above all one thing: the rules of global trade are being rewritten along CO₂ lines.

United Kingdom sets the pace – CBAM from 2027

In July 2025, the United Kingdom officially confirmed that it will introduce its own CBAM in 2027. The mechanism is modeled on the EU and covers sectors such as iron, steel, aluminum, fertilizers, cement, and hydrogen. One important deviation is the introduction of a company threshold of 50,000 pounds per year, below which importers are exempt. Compared to the EU’s shipment-based exemption previously in force, this reduces the reporting burden for smaller companies. The EU is following suit here with the now valid 50-ton threshold. For companies operating on both sides of the Channel, the UK CBAM creates two parallel systems that are structurally similar but operationally different.

North America takes different paths

Canada is moving quickly. Consultations launched earlier this year aim to integrate a CBAM into the existing national carbon pricing system. The focus is particularly on sectors such as aluminum and cement, which could lose competitiveness due to carbon cost shifting. A draft bill is expected before the end of the year. Canada is also examining to what extent the national carbon price can be recognized under CBAM-an initial step toward bilateral recognition. In the United States, political gridlock persists, but interest in border carbon mechanisms is growing. Three bills have been introduced in the past twelve months: the PROVE IT Act for emissions data transparency, the Foreign Pollution Fee Act with a clearly protectionist orientation, and the Clean Competition Act, which comes closest to the EU model. None of the proposals has yet been adopted, but pressure from industry and politics is mounting.

East Asia responds strategically

South Korea has operated a national emissions trading system since 2015 and is now deliberately expanding its scope. On 10 September, the Ministry of Environment confirmed the inclusion of the aluminum sector by no later than the second quarter of 2026. In addition, talks are underway with the European Commission to have the Korean ETS officially recognized-a step that could enable CBAM deductions for exports. Taiwan is pursuing a similarly pragmatic approach. The Ministry of Economic Affairs has presented a draft for a carbon levy and initiated formal consultations with Brussels in October 2025. The goal is mutual recognition to avoid competitive disadvantages for exports. Taiwan aims to introduce its own CBAM in 2027. Japan is also closely analyzing the CBAM model. Since August 2025, a consultation led by the Ministry of Economy, Trade and Industry has been underway. While political willingness remains cautious, feedback from industry shows strong interest in aligning with EU standards.

India, Brazil, and South Africa: The Global South positions itself

India is pursuing a dual strategy. While the government openly criticizes the EU CBAM at the WTO, it is simultaneously working on a national carbon market. In early September, the Ministry of Power published a framework draft that would initially cover major industrial emitters. Bilateral talks with the EU on transparency and transitional arrangements are also underway. Brazil is a step further. On 3 October, the lower house of parliament passed a law introducing an emissions trading system focused on sectors such as cement and steel. Although CBAM is not explicitly mentioned, leading politicians emphasize that the system is intended to safeguard export capability in carbon-priced markets. South Africa is taking a different approach: instead of building a new system, the country is calling for recognition of its existing carbon tax, in force since 2019. Talks with the EU are currently underway to avoid double charging.

Turkey prepares

Turkey has also begun to respond to CBAM. In July 2025, the Turkish Ministry of Environment published a draft for a national emissions trading system to be introduced gradually from 2026. The aim is to prepare Turkish exporters-particularly in the steel and cement industries-for the rising requirements of the EU market. In parallel, negotiations on possible mutual recognition with the EU are being conducted.

Convergence across borders

Despite very different political systems, initial commonalities are emerging. South Korea and Taiwan are already conducting joint technical talks with the EU. Canada’s consultations are partly aligned with Japanese review procedures. These overlaps suggest that a globally compatible CBAM framework is gradually taking shape. If bilateral recognition mechanisms are successfully implemented, this could not only simplify compliance but also reduce the risk of protectionist excesses.

What does this mean for European companies?

First: Multinational companies must prepare for complex, overlapping regulatory frameworks. Different calculation methods, thresholds, and deadlines require coordinated data and reporting systems. Second: Those who invest early in emissions and supplier transparency will gain a competitive edge-through lower costs, faster response times, and regulatory certainty. Third: Trade strategy will change. Carbon prices will influence not only margins but also supplier selection and contract design. Those who understand regulatory developments in third countries will clearly be at an advantage.

Conclusion

CBAM is no longer a uniquely European path. The mechanism has globalized. In more and more countries, the question is no longer whether to introduce it, but how. For companies in the EU, this means: preparation is not optional, it is mandatory. If you would like to prepare your company for carbon pricing in multiple countries, feel free to write to me at helge@kolum.earth. We are here to help!