The European Union’s Carbon Border Adjustment Mechanism (CBAM) begins pricing the embedded emissions of imports in January 2026 across six sectors, including iron and steel, thereby linking EU market access with carbon intensity and the EU carbon price. This will change the competitiveness of MENA exporters, requiring strategic preparedness.

The MENA region’s CBAM exposure is structural, characterized by (i) high emission intensity in certain parts of the supply chain, (ii) robust trade ties with the EU, and (iii) insufficient domestic carbon pricing, which together increase the immediate burden in iron and steel based on import value.

The brief argues that the MENA region should adopt a multi-track strategic approach in its response to the CBAM challenge. A balanced, non-binary posture that balances risk management measures with opportunity-oriented strategies. The tracks proposed are: Engagement, Proactive Adaptation, Mitigation, and Dialogue and Negotiation. This mix could transform CBAM from a threat into an investable pathway for resilient green industrialization in the MENA region.