The report analyses the implementation and impacts of the EU’s Carbon Border Adjustment Mechanism (CBAM) in Finland, Sweden, and Denmark, with a focus on competitiveness, the green transition, and emissions outcomes. CBAM, introduced in 2023 and gradually entering its definitive regime from 2026, is designed to prevent carbon leakage by aligning the carbon cost of imports with that faced by EU producers under the EU Emissions Trading System (EU ETS). While CBAM is not a climate mitigation instrument in itself, it supports the EU ETS by discouraging carbon-intensive imports and reinforcing incentives for cleaner production.
The study concentrates on four CBAM-covered sectors that are particularly relevant for the Nordic region: iron and steel, cement, aluminium, and fertilizers. These sectors are emissions-intensive, highly exposed to international trade, and central to Nordic industrial strategies. Nordic producers generally have lower emission intensity than many global competitors, due to cleaner energy systems and early investments in low-carbon technologies, which positions them relatively well under CBAM. However, structural disadvantages such as high wages, energy costs, and land prices mean that CBAM alone will not guarantee long-term competitiveness.
A key issue explored is the potential inclusion of indirect emissions (from electricity use) in CBAM. The report finds that excluding indirect emissions currently disadvantages Nordic producers, who often rely on electrified but higher-cost low-carbon power, while imports do not fully reflect electricity-related emissions. Including indirect emissions would better reflect environmental performance and could strengthen Nordic competitiveness but would also increase reporting complexity and raise costs for electricity-intensive imports such as aluminium.
Macroeconomic modelling suggests that CBAM will have modest overall economic impacts for Denmark, Finland, and Sweden, but more pronounced sectoral effects. CBAM-covered industries in the Nordics are likely to gain competitiveness as carbon-intensive imports become more expensive, while downstream industries that use CBAM goods as inputs may face slightly higher production costs . Over time, CBAM is expected to shift trade patterns toward cleaner EU production, encourage investment in low-carbon technologies, and support the Nordic green industrial transition, though total EU emissions remain governed by the EU ETS cap.
The report also examines national implementation models. All three countries combine a national competent authority with customs administration: Denmark relies on a tripartite system led by the Danish Energy Agency, Finland assigns both roles to Finnish Customs, and Sweden designates the Environmental Protection Agency alongside Swedish Customs. Effective implementation depends heavily on clear guidance, sufficient administrative resources, and reliable IT systems.
In terms of emissions accounting, CBAM is expected to gradually reduce Nordic consumption-based emissions by discouraging high-carbon imports and promoting cleaner suppliers. However, current consumption-based accounting models are not well suited to capture CBAM’s highly granular emissions data, although CBAM offers opportunities to improve data quality in the future.
The report concludes with policy recommendations, including preparing for the inclusion of indirect emissions, actively shaping EU rules for recognizing third-country carbon pricing, prioritizing key sectors for CBAM expansion (such as organic chemicals and certain downstream products), streamlining national implementation, and integrating CBAM data into emissions accounting systems. Overall, CBAM is seen as a valuable complement to the EU ETS that can enhance Nordic competitiveness in low-carbon industries, provided it is paired with stable climate policy and targeted industrial support.