The CBAM complements the EU ETS by extending carbon pricing to goods imported from outside the EU. While the ETS sets a cap on greenhouse gas emissions from industrial installations within the EU and allows trading of emission allowances, the CBAM covers emissions associated with imported goods. When fully implemented, the CBAM will cover more than half of the emissions in ETS-covered sectors, without employing a ‘cap and trade’ system like the ETS.
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