CBAM and International Law: Balancing Sustainable Trade, Climate Justice, and Legal Equity

¹ Faculty of Law, Universitas Jambi, Jambi, Indonesia
² Faculty of Law, Universitas Muhammadiyah Yogyakarta, Yogyakarta, Indonesia

^* Corresponding author: yordangunawan@umy.ac.id

Abstract

The European Union’s establishment of the Carbon Border Adjustment Mechanism (CBAM) signifies a legal advancement that aligns decarbonization goals with the international trade framework. This research is motivated by the increasing urgency of global energy transition and the potential normative conflicts between wealthy and developing nations about climate justice. The research problem examines the alignment of CBAM with international environmental law concepts and World Trade Organization (WTO) regulations. This paper employs a normative juridical approach and performs a regulatory analysis of Regulation (EU) 2023/956 to assess the legal foundations, equitable implications, and structural effects of CBAM. The main goal is to evaluate the capacity of CBAM to serve as a lawful, equitable, and inclusive legal tool in promoting a global green transition. The results suggest that while CBAM is legally established and has the ability to mitigate carbon leakage, its unilateral application may intensify global inequalities, especially for developing nations. Consequently, a revision of the policy is essential, one that guarantees enhanced inclusion, just compensation mechanisms, and equitable international discourse, to allow CBAM to function as a transformative tool in attaining climate justice and sustainable commerce. This paper offers one of the few legal equity analyses of CBAM that bridges international trade law, climate justice, and sustainable development.