EU Carbon Border Rules Edge Closer to Article 6 Recognition—And South Korea Is Taking Notes

A draft regulation circulating within EU institutions could significantly expand how carbon costs are recognised under the bloc's carbon border levy—while on the other side of the world, one of its major trading partners is already preparing its exporters for what comes next.

EU and South Korean business leaders meeting in front of a newly planted forest, highlighting collaboration amid changing carbon rules. AI generated picture.

The Carbon Border Adjustment Mechanism (CBAM), which began imposing charges on carbon-intensive imports from this year, currently requires EU importers to surrender allowances corresponding to embedded emissions in their goods. Exporters can reduce this obligation if they prove a carbon price was already paid during production—but carbon credits issued under the Paris Agreement's Article 6 mechanisms have so far been excluded from that calculation.

A compromise text put forward by Cyprus, which holds the EU's rotating presidency, proposes changing that. Under the draft, Article 6 credits could count as an effective carbon price paid in the exporting country, provided they are used within a binding compliance scheme rather than purchased voluntarily. The text is explicit on this point: 'The definition of carbon price in the CBAM Regulation essentially covers compliance schemes, in form of carbon taxes explicitly levied on the carbon content and binding emission trading systems (ETSs).'

If backed by EU governments and the European Parliament, the change would allow exporters operating under domestic emissions trading systems—China's ETS being a notable example—to apply Article 6 credits against their carbon costs, with those costs then offset against their CBAM liability. Deductions would be calculated in monetary terms based on certified evidence, not emissions volumes.

The draft also draws a firm boundary around EU environmental accounting: Article 6 credits used for CBAM purposes would not contribute to the EU's own Paris Agreement targets. A separate emergency provision, allowing temporary suspension of specific goods from the CBAM in cases of severe market disruption or supply chain stress, has also been retained in the text for a maximum duration of two years.

Meanwhile, South Korea—one of the EU's major trade partners, with the bloc absorbing around 10% of its exports—is not waiting for final rules to land. Korea Environment Corporation (K-eco), a body under the Ministry of Environment, has opened applications for a government-backed consulting programme designed to help domestic companies meet CBAM requirements. Up to 100 businesses will receive free on-site support covering emissions calculation across full production cycles, from raw material sourcing to final shipment.

Eligible companies include both direct exporters of CBAM-covered goods and producers of intermediate materials used in those products. The application window runs from 30 March to 26 April, with selected participants announced in early May and support continuing through December. Any future broadening of CBAM to cover sectors such as semiconductors would sharpen the pressure on the Korean industry considerably.