Beyond Borders: CBAM’s Revolutionary Potential and Challenges in Achieving Carbon Neutrality

Abstract

The Carbon Border Adjustment Mechanism (CBAM) is a ground-breaking method for attaining carbon neutrality in international trade as the world community struggles with the pressing need to address climate change. This research investigates how the CBAM might influence the dynamics of international trade and promote the shift to low-carbon, sustainable economies. A critical analysis has been conducted to explore the CBAM's transformational potential in bringing trade practices into line with climate goals by examining its economic, environmental, and political components and its implication practice, covering issues with trade equity, enforcement protocols, and possible geopolitical conflicts. The information has been gathered from several reliable sources, including the WTO, the European Commission for trade input, the World Bank, and the EPA for emission information. It has been compiled into a tabular format for simplicity of reading. The graphs have been plotted using Python (3.11.6) to improve visual comprehension. Stakeholders may help CBAM implement successfully by adopting these suggestions, maximising its revolutionary potential, and overcoming the difficulties in reaching carbon neutrality in international trade. By using an interdisciplinary approach, the study seeks to offer a thorough grasp of CBAM's function in becoming carbon neutral, revealing the complex obstacles that must be overcome for it to integrate into the world economy successfully.