NVIDIA (NVDA Stock) closed 2025 with a huge portion of the GPU market. Research data shows that the company held about 92 percent of the discrete graphics processing unit (GPU) market in the first half of 2025. This figure covers add-in boards used in personal computers and workstations. Its closest rivals, including AMD and Intel, held much smaller shares.

The company unveiled its new Rubin data center chips. They claim these chips are 40% more energy efficient per watt. This change aims to make artificial intelligence (AI) computing more sustainable.

NVIDIA’s GPUs dominated the sector used for gaming and AI. Despite challenges with its latest Blackwell GPU launch, the company’s lead remained strong. This article explains how Nvidia maintained this market position. It also explains how the company is tackling environmental and energy issues in its products and operations.

How NVIDIA Came to Control the Majority of the GPU Market

NVIDIA’s market share for discrete GPUs reached about 92% in early 2025, according to analysts tracking GPU shipments. This dominance was especially clear in desktop graphics cards. Competing firms such as AMD held much smaller portions, with AMD’s share closer to 8% and Intel below 1% in the same period.

Discrete GPUs are separate from CPUs and are the main components used for high-end graphics and data-intensive tasks. NVIDIA’s rise in market share reflects strong demand for its GeForce and AI-oriented GPU lines. Many industries, from gaming to data centers, use Nvidia chips because of their computing performance.

Despite this strong market position, the rollout of the Blackwell series of GPUs faced setbacks in 2025. Industry reports noted delays and production issues related to complex design and manufacturing steps. These issues slowed initial deliveries to customers. Company leadership said the problems were fixed, but they still affected how quickly new units reached buyers.

Why Energy Use and Efficiency are Significant for GPUs

Graphics processing units are energy-intensive components. AI and data center workloads consume substantial electricity. Because of this, environmental, social, and governance (ESG) concerns are now central to technology markets.

NVIDIA acknowledges the need to improve energy efficiency and reduce emissions. The sustainability report for fiscal year 2025 shows that the company uses 100% renewable electricity for its offices and data centers. This means all the electricity Nvidia buys for those facilities comes from renewable sources, such as wind or solar.

• In product design, NVIDIA promotes energy efficiency as a key measure of sustainability.

At CES 2026, NVIDIA unveiled its new Rubin architecture for data center GPUs. The company claims the chips deliver 40% higher energy efficiency per watt compared to the previous generation.

Unlike a single chip, Rubin combines six specialized chips that work together as one unified system. This rack-level design helps handle large AI workloads more efficiently, reducing power use while boosting speed. The new platform allows large AI data centers to operate more sustainably, making it a notable step in Nvidia’s push toward “Green AI.”

Jensen Huang, founder and CEO of NVIDIA, said:

“Rubin arrives at exactly the right moment, as AI computing demand for both training and inference is going through the roof. With our annual cadence of delivering a new generation of AI supercomputers — and extreme codesign across six new chips — Rubin takes a giant leap toward the next frontier of AI.”

Key components of the Rubin platform include:

• Vera CPU – a multi-core processor that manages data flow to keep GPUs busy.
• Rubin GPU – the main AI processor with next-generation compute engines and high-speed memory.
• NVLink 6 & ConnectX‑9 – fast interconnects for rapid communication between chips.
• BlueField‑4 DPU & Spectrum‑6 switch – manage networking, security, and data traffic efficiently.

This improvement tackles worries about increased power use in AI tasks. It also helps lower emissions from data center operations. Industry leaders, including Microsoft and Google, quickly endorsed the efficiency gains.

NVIDIA has set internal goals to cut emissions and to align reductions with widely accepted climate science targets. It works with many suppliers, especially those linked to its Scope 3 emissions. This helps encourage them to adopt science-based emissions goals.

NVIDIA’s ESG Progress Under Growing Scrutiny

Investors and customers now place greater focus on ESG performance. Environmental criteria include energy consumption, emissions, and resource use. Nvidia sits among tech companies that increasingly report sustainability metrics.

In fiscal 2025, NVIDIA reported progress on its environmental goals. This includes using more renewable energy and improving efficiency. These efforts do not yet translate directly into a formal net-zero emissions commitment for all scopes of greenhouse gases.

• SEE MORE: NVIDIA Posts Over $46B Revenue in Q2 But Stock Slides, Balancing Record Profits with Green Goals

However, they reflect measurable progress. The company’s renewable energy targets and supplier engagement aim to reduce its emissions footprint over time.

At the same time, critics highlight areas where NVIDIA’s broader impact remains unclear. Some assessments say large chipmakers need to improve supply chain emissions. They should also adopt more energy-efficient production methods. These factors are part of an ongoing discussion among investors and sustainability groups.

Using renewable electricity, improving energy efficiency in products, and tackling supplier emissions are key steps. They help NVIDIA reduce direct and indirect climate impacts from its operations. As AI and high-performance computing grow, these sustainability efforts may shape long-term industry standards.

AI Demand, Competition, and the Future of GPUs

NVIDIA’s strong market position affects the tech and semiconductor industries in many ways. The GPU sector supports not only gaming but also AI, cloud computing, scientific research, and automated systems.

NVIDIA is not just a leader in desktop GPUs. Analysts say its influence also covers AI accelerators in data centers. The company holds over 80% of the AI hardware market. This success relies heavily on its architecture and software ecosystem.

The Rubin architecture strengthens NVIDIA’s competitive position in AI hardware. The new 40% better energy efficiency attracts hyperscalers and large enterprises that want high performance without high power use. Analysts believe this may strengthen Nvidia’s lead in AI accelerators. It also helps address ESG concerns about energy use.

Elon Musk, founder and CEO of xAI, remarked:

“NVIDIA Rubin will be a rocket engine for AI. If you want to train and deploy frontier models at scale, this is the infrastructure you use — and Rubin will remind the world that NVIDIA is the gold standard.”

In data centers, NVIDIA reported strong revenue growth driven by demand for AI computing. Blackwell and other GPU families contributed heavily to this trend.

However, the company relies on third-party manufacturing and complex supply chains. This means production challenges can affect future performance. Continued competition from AMD and other firms may also reshape market share over time.

The strong demand for AI processing power has energy and environmental implications beyond NVIDIA alone. Data centers worldwide are expected to grow in electrical demand as AI workloads expand.

Researchers estimate that data centers could account for about 2% of global electricity use in 2025. This highlights how crucial energy-efficient hardware and renewable energy are for the industry.

What NVIDIA’s Dominance Means Going Forward

NVIDIA’s ability to end 2025 with a 92% discrete GPU market share highlights its technological leadership. It also reflects strong demand for AI and graphics hardware in computing markets. The Blackwell launch issues have shown how production challenges can affect schedules, but demand has remained resilient.

At the same time, NVIDIA’s sustainability actions reveal how ESG and environmental issues are increasingly part of how technology companies operate and compete. Renewable energy use, energy efficiency, and emissions-reduction efforts are not only regulatory or investor concerns. They influence product design and operational planning as energy use grows in AI and data center environments.

• READ MORE: NVIDIA Stock Rebounds as AI Product Launch and Data Center Demand Restore Confidence

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Carbon capture has entered a decisive phase. What once looked like an experimental climate solution now stands at the center of global decarbonization strategies. By 2026, governments, corporations, and investors increasingly rely on carbon capture to deal with emissions that cannot be eliminated.

Three companies now dominate this space: Climeworks, Carbon Engineering, and SLB Capturi. Each addresses a different part of the problem. Some remove carbon dioxide directly from the air. Others stop emissions at factories before they escape. Together, they shape how the world manages residual emissions in a tightening net-zero era.

Market Overview: Why Carbon Capture Matters Now

BCC Research highlighted that the global market for carbon capture, utilization, and storage (CCUS) technologies was at $3.4 billion in 2024. It is projected to reach $9.6 billion by the end of 2029, at a compound annual growth rate (CAGR) of 23.1% during the forecast period of 2024 to 2029.

Governments expanded incentives, while companies faced growing pressure to meet climate commitments with real, measurable outcomes.

In the United States, tax credits under the Inflation Reduction Act made large-scale capture projects financially attractive. In Europe, the expanded EU Emissions Trading System increased compliance costs, pushing industries toward capture solutions. Meanwhile, corporate buyers signed long-term contracts to secure high-quality carbon removal credits.

At the same time, technology advanced quickly. Capture costs fell, monitoring systems improved, and long-term storage options expanded. Leading projects now capture carbon for less than $300 per ton, a sharp drop from early pilot costs.

By 2026, more than 20 direct air capture facilities operate worldwide. Still, most captured carbon comes from point-source projects in cement, steel, waste-to-energy, and hydrogen production. Permanence, transparency, and verification now define success in the carbon market.

Climeworks: From DAC Pioneer to Carbon Removal Platform

Climeworks remains the most visible name in direct air capture. Based in Switzerland, the company developed modular systems that pull carbon dioxide directly from the air using fans and solid filters.

Its Iceland operations set early benchmarks. The Orca plant captures 4,000 tons of CO₂ per year. The newer Mammoth facility scales capacity to 36,000 tons annually. Generation 3 technology sharply cuts energy use, making DAC more efficient and easier to expand.

However, it has evolved beyond hardware alone.

Building Diversified Carbon Removal Portfolios

Climeworks now offers blended carbon removal portfolios designed for corporate buyers. These portfolios combine direct air capture with other engineered and nature-based removal methods. The strategy spreads risk while meeting different climate and budget needs.

The portfolio includes:

• Direct Air Capture with geological storage
• Bioenergy with carbon capture and storage (BECCS)
• Biochar
• Enhanced rock weathering (ERW)
• Afforestation and reforestation
• Mangrove restoration

Each method provides a different storage lifespan. DAC and BECCS store carbon for over 10,000 years. ERW lasts about 1,000 years. Biochar offers century-scale storage. Nature-based projects provide shorter-term storage but deliver strong co-benefits for ecosystems and communities.

By 2026, Climeworks will deliver over 50,000 tons of verified carbon removal credits per year. Buyers include Stripe, Schneider Electric, and shipping giant NYK. Credit prices range from $600 to $800 per ton, reflecting strong demand for durable removals.

This portfolio model positions Climeworks as a full-service carbon removal provider, especially for companies tackling Scope 3 residual emissions.

• READ MORE: Climeworks Seals Landmark Carbon Credits Deal with Silicon Valley Startup CarbonZero.Eco for its First Commercial Biochar Facility 

Carbon Engineering: Scaling Direct Air Capture to Megatons

Carbon Engineering takes a bold, industrial approach to carbon removal. Instead of small modular units, it builds large-scale DAC plants designed to capture hundreds of thousands of tons of CO₂ each year.

The Canada-founded company uses a liquid solvent process. Air flows through large contactors, where potassium hydroxide captures CO₂. The system regenerates the solvent in a closed loop, producing a pure CO₂ stream ready for storage or fuel production.

Occidental Petroleum acquired Carbon Engineering in 2023, accelerating its scale-up through access to capital, storage sites, and energy infrastructure.

The Stratos Project Sets a New Standard

By 2026, Carbon Engineering’s Stratos facility in Texas will capture between 500,000 and 1 million tons of CO₂ annually, making it the world’s largest DAC plant.

The company relies on proven industrial equipment and standardized designs. This “design one, build many” approach lowers costs and speeds up deployment across regions.

Capture costs now fall between $250 and $600 per ton, supported by U.S. tax credits and long-term offtake agreements with buyers like Frontier, Amazon, and Airbus.

Linking Capture to Clean Fuels

Carbon Engineering also uses captured CO₂ to produce synthetic fuels. Its Air-to-Fuels technology combines CO₂ with green hydrogen to create low-carbon aviation fuel. This helps reduce emissions in aviation, a sector responsible for about 2–3% of global emissions.

By combining storage and fuel production, Carbon Engineering bridges voluntary carbon markets with compliance systems. Its large pipeline—running into tens of millions of tons—makes it a cornerstone of future gigaton-scale removal.

SLB Capturi: Decarbonizing Heavy Industry at the Source

While DAC removes carbon after it mixes into the air, SLB Capturi focuses on prevention. The joint venture between SLB and Aker Carbon Capture specializes in point-source carbon capture for industrial emitters.

Its amine-based technology captures more than 95% of CO₂ emissions from facilities such as cement plants, waste-to-energy sites, gas processing units, and bioenergy operations.

Designed for Fast Deployment

SLB Capturi’s Just Catch™ units are modular and compact. Operators can retrofit them into existing plants with minimal downtime. This makes them ideal for industries under immediate pressure to cut Scope 1 emissions.

Ørsted Kalundborg CO₂ Hub

By 2026, the company can support over 5 million tons of annual capture capacity across Europe and North America. Many projects connect directly to permanent storage sites, including offshore saline aquifers.

Role in Carbon Markets

BECCS projects using SLB Capturi technology qualify as durable carbon removals. These credits typically trade between $80 and $150 per ton, making them more affordable than DAC while still meeting high integrity standards.

SLB’s strength lies in integration. The company combines capture, transport, and storage into a single value chain. This end-to-end capability appeals to oil majors, utilities, and governments seeking reliable decarbonization pathways.

What This Means for Carbon Capture in 2026

Together, Climeworks, Carbon Engineering, and SLB Capturi define the carbon capture landscape in 2026. The market now rewards permanence, transparency, and verified impact. Buyers no longer chase cheap offsets. They invest in long-term solutions that stand up to scrutiny.

As net-zero deadlines draw closer, carbon capture shifts from optional to essential. These three companies show how removal and abatement can work together—turning climate ambition into real-world action.

• MUST READ: What is Carbon Capture and Storage? Your Ultimate Guide to CCS Technology

The post Top 3 Carbon Capture Leaders to Drive the Net-Zero Race in 2026 appeared first on Carbon Credits.

Artificial intelligence (AI) is changing how many industries work. It now plays a growing role in climate and energy solutions. Companies are using AI to cut emissions, reduce energy waste, and improve how clean energy systems operate. This has created a new group of firms often called “Green AI” companies.

These businesses combine advanced computing with sustainability goals. They attract investors who want growth, but also want a positive environmental impact.

AI is expected to play a major role in cutting emissions and improving energy efficiency over the next decade. According to the International Energy Agency (IEA) and industry reports:

• AI could deliver over 40% of the emissions reductions needed by 2040 when applied across energy, transport, and industry sectors.

• Data center electricity demand driven by AI is projected to more than double by 2030, reaching roughly 945 terawatt‑hours (TWh) — similar to the annual electricity use of Japan.The

• Global Green AI software market is valued at $15B  and is projected to reach $98B by 2030.

• Global economic impact of AI could reach $15 trillion by 2030, with a significant share coming from applications that improve sustainability and energy efficiency.

In short, AI is transforming industries. Companies that combine AI with sustainable practices are becoming market leaders. Firms investing in AI for energy efficiency and climate monitoring not only help the environment but also position themselves for long-term growth as the world moves toward cleaner energy systems.

By 2026, AI, cloud computing, and clean energy technologies will create major investment opportunities. Within this trend, four Green AI stocks stand out for their innovation, financial strength, and commitment to a greener future.

Microsoft (MSFT): Green AI at Global Scale

Microsoft is one of the largest technology companies in the world. It is also a leader in using AI to support climate goals. Its cloud services, software platforms, and data centers give it a strong position in Green AI.

The company has committed to becoming carbon negative by 2030. This means it plans to remove more carbon from the atmosphere than it emits. AI plays a key role in this effort. Microsoft uses AI to track energy use across its global data center network. These systems help balance workloads, improve cooling, and reduce wasted electricity.

Microsoft also runs the AI for Earth program. This program supports groups that use AI to study forests, water systems, climate risks, and natural disasters. These projects help governments and researchers better understand environmental changes.

In short, the tech giant leverages AI for these green reasons:

• Uses AI to monitor and optimize energy use across global data centers and offices.
• AI-powered workload balancing and cooling systems reduce electricity consumption.
• AI for Earth program applies AI to track forests, water resources, and climate hazards.
• Helps achieve carbon-negative operations by 2030.
• AI tools support sustainability for both Microsoft and thousands of enterprise customers.

Microsoft’s financial position is very strong. In 2025, its market value was above $2.8 trillion. Annual revenue reached about $220 billion, with operating margins close to 36%. This scale allows the company to invest heavily in AI and sustainability without hurting profits.

Microsoft stands out because of its reach. Its AI tools affect not only its own operations, but also thousands of companies that use its cloud and software services. This makes it a central player in the Green AI stocks space.

SEE MORE on MICROSOFT:

• Microsoft’s $6.2 Billion AI Bet in Norway for 100% Renewable Energy-Powered Computing
• Microsoft Leads on Climate: $800M CIF Drives Clean Tech and AI Energy Deals with ADNOC, Masdar, and XRG

Alphabet (GOOGL): AI Efficiency for Energy-Heavy Systems

Alphabet, the parent company of Google, is another major force in the Green AI stocks market. It runs one of the world’s largest digital infrastructures. This includes search engines, cloud platforms, and data centers that use large amounts of electricity.

Google has been carbon neutral since 2007. It now aims to operate on 24/7 carbon-free energy by 2030. AI is a core tool in reaching this goal.

Machine learning systems help Google predict energy demand and manage renewable power supply. AI also controls data center cooling, which reduces electricity use and operating costs.

These efficiency gains are important because data centers are growing fast. As AI usage increases, energy demand rises. Alphabet’s approach shows how AI can help control this growth instead of making emissions worse:

• AI predicts energy demand and optimizes data center cooling systems, cutting electricity use.
• Supports Google’s goal of 24/7 carbon-free energy by 2030.
• Uses AI to forecast renewable energy output for its grid and operations.
• AI-driven efficiency reduces operational costs while lowering carbon footprint.
• AI projects extend to climate research, including forest monitoring and renewable energy planning.

Alphabet’s financial strength supports its long-term plans. In 2025, the company reported about $320 billion in revenue and had a market value near $1.8 trillion. Growth in cloud computing and AI services continues to drive earnings.

For investors, Alphabet offers a mix of scale and discipline. Its Green AI efforts are built into everyday operations. They are not side projects, showing how environmental goals can align with cost savings and strong financial results.

• SEE MORE on GOOGLE:
  • Google’s Bold Climate Actions: AI in the Amazon and Solar Power in Space!
  • Google Joins ReNew Energy for 150 MW Solar Project in India to Cut Scope 3 Emissions

Stem, Inc. (STEM): Smarter Batteries for Clean Energy

This is a public company that builds software and services to make energy storage systems smarter and more efficient. Its main product, Athena, uses AI and machine learning to monitor data from solar panels, batteries, and electric systems in real time. Athena predicts when to store energy and when to use it, helping customers maximize savings and reduce fossil fuel reliance.

Stem operates in more than 50 countries and manages energy for thousands of sites, including utilities and large commercial clients. By 2025, its AI had run over 31 million hours and managed hundreds of thousands (500K+) of energy devices worldwide.

Stem trades on the NYSE under STEM. While smaller than some global tech giants, the company has grown steadily as businesses and utilities adopt energy storage.

Revenue comes primarily from AI-driven energy management services and system deployments, and ongoing expansion into new markets continues to strengthen its financial position.

Stem’s technology allows customers to optimize renewable energy use and provides measurable operational benefits, making it a compelling public-market Green AI stock.

Stem’s AI and emissions impact include:

• AI decides the best times to store or use energy to reduce fossil fuel reliance.
• Helps businesses and utilities lower electricity costs and carbon emissions.
• Supports renewable energy growth by making grids more reliable.
• Integrates solar, storage, and EV charging for efficient energy management.

Itron, Inc. (ITRN): AI for Smarter Electric Grids

Itron is a publicly traded company providing technology to utility companies worldwide. Its products include smart meters, sensors, and data software that track electricity, gas, and water usage in real time. The company’s platforms allow utility operators to quickly spot inefficiencies and make informed decisions.

In 2025, Itron partnered with Microsoft to bring generative AI tools into its systems, enabling operators to ask natural language questions and get instant insights. This improves grid reliability and helps integrate renewable energy sources such as wind, solar, and storage.

Financially, Itron, trading on Nasdaq as ITRN, generates roughly $2 billion in annual revenue. Its global customer base spans electric, gas, and water utilities, and the company continues to expand its AI-enabled offerings to enhance grid performance.

Revenue growth is supported by widespread adoption of smart meters and grid software. Furthermore, there is increasing demand for tools that make renewable energy integration more efficient.

The company has the following green AI impact:

• AI predicts energy demand to reduce waste and losses.
• Supports integration of renewable energy and storage into grids.
• Speeds up decision-making for utilities, reducing operational delays.
• Makes energy data accessible for faster, more efficient grid management.

Why Green AI Companies Matter Now

Green AI companies show how software and data can support climate goals. They do not replace renewable energy or clean infrastructure. Instead, they make these systems work better.

Several factors explain why these companies matter in the energy transition:

• Energy efficiency: AI helps reduce waste and improve system performance.
• Emissions tracking: Better data allows companies to manage carbon risks.
• Scalability: Software tools can be rolled out quickly across regions.
• Cost benefits: Many solutions save money while cutting emissions.

These strengths make green AI stocks appealing to both technology-focused and sustainability-focused investors.

What to Watch in 2026 and Beyond

The green AI market is still developing. Several trends will shape its future. More companies want tools that lower energy costs and emissions. Data centers, in particular, are under pressure to become more efficient.

Government policies also matter. Climate disclosure rules and clean tech incentives can speed up adoption. At the same time, growing AI workloads increase electricity demand. This makes efficiency tools even more valuable. 

Together, these forces support long-term growth for green AI solutions. Market estimates project it can reach up to $129 billion by 2034. 

Green AI’s Role in the Climate-Tech Landscape

Green AI is becoming a key part of climate technology. Microsoft and Alphabet apply AI on a global scale. Stem uses AI to optimize energy storage and clean power systems. Meanwhile, Itron helps utilities run smarter grids and integrate renewable energy efficiently.

Each company plays a different role. Together, they show how AI can support a cleaner and more efficient economy. For investors, green AI stocks offer exposure to climate solutions without relying only on energy production assets.

• READ MORE: Green AI Explained: Fueling Innovation with a Smaller Carbon Footprint

The post Top 4 Green AI Stocks to Watch in 2026 as AI Reshapes Climate and Energy Solutions appeared first on Carbon Credits.

The European Union has completed a review of its Carbon Border Adjustment Mechanism (CBAM) after a two‑year transition period. The European Commission said that the policy has motivated more countries to adopt carbon pricing systems beyond Europe. The review also found that when CBAM begins to charge a carbon fee, it will have minimal impact on the world’s poorest countries.

The findings come as the mechanism prepares to start charging fees in January 2026 and proposes several changes to include certain downstream products.

CBAM is a climate policy that applies a carbon price to certain imported goods that carry high greenhouse gas emissions. The goal is to create fairness for EU producers. They must follow the EU Emissions Trading System (ETS). This also aims to cut down on carbon leakage, which is when production shifts to countries with looser climate rules.

What the Review Says About Carbon Pricing

According to the Commission’s review, CBAM has spurred interest in carbon pricing in other countries. Firms and governments outside the EU are talking more about carbon pricing. They want to measure and report emissions better. This trend suggests that CBAM is serving not only as a tariff on emissions but also as an incentive to adopt carbon pricing tools more widely. 

The review assessed CBAM’s transition phase from 2023 to 2025. During this time, companies provided data on the emissions embedded in their goods imported to the EU. This data collection period helped build capacity for the full operational phase.

Starting in 2026, importers must purchase CBAM certificates that reflect the carbon price paid under the EU ETS or pay the equivalent fee. The two-year run-in period helped companies outside the EU adjust their reporting systems. They also learned about compliance requirements before fees started.

Minimal Impact on World’s Poorest Countries

One key finding of the review is that the impact on the world’s poorest countries will be limited once CBAM starts charging a carbon fee. The Commission’s assessment shows that many least developed countries don’t export a lot of CBAM-covered goods. As a result, the mechanism will not directly impose large carbon fees on them.

Many low-income countries don’t produce much high-emission stuff, like steel, aluminum, cement, fertilizers, or electricity. These are the products that CBAM first targets. Because of this, exporters from these nations are less exposed to carbon fees than those from more industrialized countries.

At the same time, the EU has acknowledged concerns from some developing nations. The Commission has urged the use of development funds and technical help. This will assist affected countries in decarbonising and lowering future carbon fees.

Some funding might come from the EU’s large development budget. This money will support clean technologies and energy systems in partner countries.

How the Carbon Border Mechanism Works

CBAM is intended to protect EU industries that already pay for carbon emissions under the ETS. Without a border adjustment, imported goods might be cheaper. If these goods don’t face similar costs abroad, they could hurt the EU’s climate policies.

• The mechanism adjusts import costs so that carbon costs are similar for EU and non‑EU products.

Starting January 2026, importers must report emissions data. They also need to buy carbon certificates for the emissions in their products. Fees will reflect the difference between the carbon price paid in the country of origin and the EU ETS price. The measure covers goods such as steel, aluminium, cement, fertilizers, electricity, and hydrogen.

These carbon fees are expected to generate revenue for the EU budget, which regulators see as a tool to support further climate action. One estimate suggests that CBAM could generate around €2.1 billion in revenue by 2030 as the scope widens and payment obligations rise.

• RELATED: EU Parliament Approves CBAM Changes to Aid SMEs and Cut Emissions

Proposed Changes: Downstream Goods in Focus

Alongside the review, the Commission has proposed changes to strengthen and expand CBAM. One major proposal targets goods further downstream in global value chains. This means products that are not raw materials but contain high shares (79%) of steel and aluminium. These could include machinery, automotive parts, household appliances, and construction equipment.

The Commission’s proposal would add around 180 new product categories to the list, potentially covering thousands of importers.

The aim of this expansion is to avoid carbon costs by simply shifting to other stages of production. Without this extension, some manufacturing may shift. This could happen to avoid carbon fees on raw materials after they become part of finished products.

The Commission also plans anti‑circumvention measures to ensure that importers cannot avoid fees by misreporting emissions. These rules are designed to require stricter reporting and sometimes use default country emissions values if actual data is missing or unreliable. 

Further reforms aim to help companies adjust and ensure fair competition. These include simplifying reporting procedures and clarifying the calculation of emissions embedded in goods.

The proposed changes reflect feedback from industry and trading partners collected during the transition.

Notably, the European Commission also started a Temporary Decarbonisation Fund. This fund helps EU producers of CBAM-covered goods. It aims to offset competitiveness losses in markets outside the EU. The EC noted that financing will come:

“…from member state contributions, constituting 25% of revenues from CBAM certificate sales in 2026 and 2027, while the remaining 75% will be an EU Own Resource.”

Pushback, Policy Debate, and Trade Tensions

Responses to the CBAM and its reforms vary. Some industry groups want more support to stay competitive. This is especially true for downstream products. These products were not initially covered but now face carbon-related cost pressures.

Others warn that some loopholes remain or that the mechanism may not fully prevent carbon leakage. 

Critics argue that parts of the proposed reforms may cater too closely to heavy industry demands, weakening climate impact. They highlight concerns about temporary funds and exemptions that could help EU exporters without strong environmental requirements. Such measures, they say, risk diluting CBAM’s core climate objective.

For instance, even with the expanded product list, the carbon levy will only boost emission cuts by 0.6% to 2%, per the Commission’s CBAM review report.​ Most savings—38.3 million tonnes of CO₂ by 2030—come from the original CBAM design, without downstream products.

At the same time, many trading partners have expressed concerns about CBAM’s implications for global trade. Some large economies, including China, India, and Brazil, have criticised the mechanism as potentially burdensome or protectionist.

The EU has emphasised that CBAM is a climate policy, not a trade barrier, and that it aligns with World Trade Organization (WTO) rules.

Despite these debates, global interest in border carbon adjustments is growing. Several countries and regions are studying similar carbon pricing tools as part of climate strategies. 

What Comes Next for CBAM? From Transition to Full Enforcement

CBAM enters full operational status on 1 January 2026. Importers must begin submitting required data and prepare to pay carbon fees for the first time for goods entering the EU. The revenue and climate enforcement tools tied to CBAM will develop as implementation proceeds and as extensions to more product categories are adopted.

The Commission plans ongoing evaluations of CBAM’s design and impact. Later reviews could explore including indirect emissions or extending coverage to additional sectors such as chemicals. These future steps are meant to strengthen the link between carbon pricing, trade, and global decarbonization.

• READ MORE: Harvard Says U.S. CBAM Could Deliver $200 Billion—and a Cleaner Future

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