1. Introduction

The Carbon Border Adjustment Mechanism (CBAM) marks a fundamental shift in the EU’s climate and industrial policy architecture. Introduced in 2023 and gradually expanded toward its definitive regime in 2026–2034, CBAM seeks to ensure that the carbon content of imported goods is priced equivalently to that of goods produced within the EU. By doing so, it aims to prevent carbon leakage, safeguard the effectiveness of the EU Emissions Trading System (EU ETS) and encourage cleaner production practices globally.

While the EU Emissions Trading System (EU ETS) is the central instrument driving emission reductions and the green transition within the EU, CBAM is a trade-related mechanism designed to prevent carbon leakage by aligning the carbon cost of imports with that faced by EU producers. For the Nordic countries—characterised by ambitious climate targets, advanced industrial sectors, and relatively low-carbon production profiles—CBAM represents both an opportunity and a strategic challenge. As the mechanism progresses through its transitional phase and into the definitive regime, Nordic industries face new competitive dynamics, shifting cost structures, and new administrative requirements. At the same time, by supporting the effectiveness of the EU ETS and reducing carbon leakage risks, CBAM may indirectly influence investment incentives for low-carbon industrial investment, reshape trade patterns, and influence both territorial and consumption-based emissions in the region.

This report, commissioned by the Nordic Council of Ministers’ Nordic Environment and Economy Programme, aims to map and analyse how an expansion of CBAM could impact the Nordic countries, as well as its effect on the green transition and consumption-based emissions. Key areas of focus include the inclusion of indirect emissions, the potential expansion to new industries, the implications for Nordic industry competitiveness, and the green transition. Additionally, the project examines administrative requirements for effective implementation and the effects of CBAM on consumption-based emissions. The focus of the report is on the implementation of the CBAM in Sweden, Denmark and Finland.

Key questions to be answered from a Nordic perspective:

How would the inclusion of indirect emissions in CBAM affect the Nordic countries and their industrial competitiveness?
What impact would including indirect emissions have on emission pricing incentives in third countries?
Which industries would be particularly relevant to consider for an expansion of CBAM to new sectors?
How could CBAM influence the green transition in the Nordic countries in the long run?
What potential positive effects could CBAM have from a Nordic perspective?
What conditions must be met for CBAM to function effectively?
How will CBAM affect industries that are strongly represented in the Nordic countries in both the short and long term?
What administrative arrangements have Nordic countries implemented for CBAM, and which authorities are responsible for its execution?
How might CBAM impact consumption-based emissions in the Nordic countries, and can current calculation systems account for these changes?

Four sectors—iron/steel, cement, aluminium, and fertilisers—form the empirical focus of the study. These sectors are highly relevant for the Nordic region due to their economic importance, emissions profiles and exposure to international trade. They also reflect areas where the interplay between EU climate policy, global supply chains, and domestic industrial strategies is expected to be particularly significant.

The report has been authored by Rikke Fischer-Bogason, Matias Lund Pedersen, Laura Schou Bagh, Agnes Plesner Skårup and Amalie Engelbrecht, Norion Consult (Denmark), Lars Zetterberg and Johan Rootzén IVL (Sweden), and Tero Kuusi, ETLA (Finland).