This new EsadeGeo Policy Brief, part of the Observatory on the Geopolitics of the Energy Transition in partnership with Fundación Repsol, analyses the limits of CBAM as it moves from its pilot phase (2023–2025) to full implementation in 2026. The paper argues that while CBAM is an essential step toward a fairer and cleaner global trading system, it remains a necessary but insufficient instrument to achieve the EU’s dual goals of decarbonisation and competitiveness. Unless its structural weaknesses are corrected, CBAM risks becoming a unilateral trade measure rather than a driver of global convergence.

The brief calls for a broader climate-industrial strategy that integrates CBAM within a comprehensive policy mix. Among its recommendations: expand carbon accounting to include indirect electricity-related emissions; align CBAM with EU electricity-market reform; design targeted carbon-leakage safeguards and export adjustments compatible with WTO rules; and use CBAM revenues to finance green industrialisation in developing countries. At the diplomatic level, EsadeGeo proposes that the EU transform CBAM into the entry point of a carbon-pricing club, a coalition of trading partners committed to progressively aligning carbon prices by the mid-2030s.

By combining stronger technical design, fairer industrial protections, and an outward-looking climate diplomacy, Europe can turn CBAM from a defensive tool into a global catalyst for carbon-price convergence. The next decade will determine whether the EU can seize this narrow window of opportunity to prove that decarbonisation and open trade can reinforce, rather than contradict, one another.