The European Commission has said it will offer development funding to countries affected by the European Union’s carbon border adjustment mechanism (CBAM), as the bloc moves towards charging for the carbon content of certain imports from 2026. The plan is intended to support decarbonisation in partner countries while the tariff regime is phased in.
In a policy paper on climate and energy diplomacy published on Thursday, the Commission said it would seek to channel support through “Global Europe”, a proposed €200 billion international development envelope in the EU’s next long-term budget for 2028–2034. The funding would target emissions cuts in heavy industry and clean-energy deployment, with the stated aim of addressing concerns from developing economies about the trade effects of CBAM.
CBAM enters its charging phase on 1 January 2026, following a transitional reporting period that began in October 2023. From 2026, importers of covered goods must buy CBAM certificates priced in line with the EU Emissions Trading System (ETS); settlement for 2026 imports begins in early 2027. The mechanism initially applies to carbon-intensive products including iron and steel, cement, aluminium, fertilisers, electricity and hydrogen, alongside certain precursors.
EU Energy Commissioner Dan Jørgensen said Brussels would not dilute climate legislation in response to criticism, but would work with partners on financing and technical assistance. He cited opportunities to invest jointly in clean industrial projects, including renewable power and hydrogen production in Africa, which the EU is seeking to import. “We’re not going to back-track on the green transition,” he said, adding that the Commission is “not deaf” to concerns raised by trading partners.
The Commission’s diplomatic push comes as several emerging economies — notably Brazil, South Africa and India — have argued that CBAM risks penalising developing countries. EU officials contend that the border levy is designed to prevent “carbon leakage” by aligning the carbon costs faced by EU producers with those of importers, and say development support can help industries decarbonise and so reduce any CBAM bill.
Alongside the funding initiative, Brussels plans to step up engagement with business in its energy diplomacy and to identify priorities for clean-technology investment abroad. The strategy is intended to diversify supply chains and reduce dependencies in sectors such as batteries and solar manufacturing, where China currently dominates. The climate-diplomacy paper frames these measures as part of a broader effort to build “a global clean and resilient transition” linked to the EU’s Clean Industrial Deal.
The CBAM design has also evolved over recent months. In May, EU countries agreed to narrow the number of firms directly subject to the tariff by introducing a quantitative threshold, while maintaining coverage of more than 99% of emissions within the CBAM scope. Importers handling small volumes of high-emission goods would be outside the regime, reducing administrative burdens without changing its environmental objective, according to the proposal. The charging start date of 2026 is unchanged.
The funding proposal via Global Europe would sit within the EU’s next seven-year budget, for which the Commission tabled its main elements in July and September. The package is presented as a means to align external spending with strategic priorities, including climate action and industrial competitiveness. Details on allocation and governance will be negotiated by EU institutions and member states as part of the 2028–2034 financial framework.
The Commission has also intensified outreach on carbon pricing globally ahead of CBAM’s charging phase. Officials have promoted emissions-trading systems and compatible carbon-accounting rules as ways for partner countries to mitigate CBAM exposure and integrate into low-carbon value chains. Discussions have included major trading partners such as China, India, Brazil and Türkiye, with proposals for cooperation on market design and data standards.
Next steps centre on implementation. Importers will continue quarterly reporting during the transition, moving to certificate purchases from 2026. Partner countries seeking to lower exposure may focus on sector-specific decarbonisation plans, carbon-pricing reforms, and verification systems to demonstrate actual embedded emissions. The Commission’s paper indicates that EU development finance and technical assistance will be deployed to support those measures, while the EU maintains the core CBAM architecture.
For developing economies, the combination of targeted finance, technology cooperation and clearer carbon-accounting pathways could determine the extent of any new costs at the border. For the EU, the package forms part of an attempt to pair trade-related climate policy with external investment, in order to manage diplomatic frictions while advancing decarbonisation in energy-intensive supply chains.
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