CBAM Initiative

What is the Impact of CBAM on Trinidad and Tobago?

Trinidad and Tobago is the world’s second-highest exporter of ammonia to Europe with exports amounting to approximately $TTD33.8 billion annually. Consequently, the country faces significant challenges due to the CBAM as the nation’s exports, including ammonia and fertilizers, are vulnerable to tariffs, potentially eroding their competitiveness in the EU market.

The CBAM can lead to higher production costs and negatively affect foreign exchange earnings.

This situation underscores the need for Trinidad and Tobago to invest in cleaner technologies and renewable energy sources to maintain their position in the global market.

The European Union’s Carbon Border Adjustment Mechanism (CBAM) is designed to tackle carbon leakage by ensuring that imported goods are subject to the same pricing as products manufactured with the EU. This measure encourages countries to adopt cleaner production methods while reinforcing the EU’s climate commitments.

Key Highlights of CBAM:

Implementation:

Transitional Phase (2023-2025): Began on October 1, 2023, requiring importers to report carbon emissions embedded in their products without incurring any financial costs.
Definitive Phase (from 2026): Importers will be obligated to buy CBAM certificates that reflect the carbon footprint of their imports

Coverage:

Applies to high-emission sectors such as cement, iron and steel, aluminum, fertilisers, electricity, and hydrogen- industries deemed most vulnerable to carbon leakage.

Operational Framework:

Importers must disclose the carbon content of imported goods
Importers must purchase CBAM certificates priced in line with the EU Emissions Trading System (ETS)
Any carbon costs already paid in the exporting country can be deducted from their CBAM obligations.