Carbon border adjustment mechanisms (CBAM) are an emerging set of trade policy tools that aim to prevent carbon-intensive economic activity from moving out of jurisdictions with relatively stringent climate policies and into those with relatively less stringent policies. Border adjustments have the potential to increase the environmental effectiveness of climate policies, by averting shifts in economic activity that could lead to higher total greenhouse emissions—a phenomenon known as “carbon leakage.” They are also seen as a way of protecting industrial competitiveness by reducing the incentive for businesses to move production abroad.

This factsheet compares border adjustment-related proposals introduced in the 118th Congress (2023–2024). It also outlines key policy considerations in designing a carbon border adjustment.