The EU’s Carbon Border Adjustment Mechanism (CBAM) will enter its definitive phase in January 2026, and CBAM tariffs are set to have major ramifications for countries exporting goods to the EU. What will be the impact of CBAM on Azerbaijan, Kazakhstan and Turkmenistan, also referred to as the Greater Caspian region?
The Caspian Sea is gaining increasing centrality in new trade routes between Asia and Europe playing a fundamental role in promoting economic connectivity between the two regions. The conflict in Ukraine and the rising tensions in the Middle East and Red Sea have highlighted the vulnerability of current supply chains for essential commodities. Consequently, it has underscored the potential significance of the Caspian Sea and its surrounding states — especially Azerbaijan, Kazakhstan, and Turkmenistan — whose energy reserves and potentials could help the EU diversify away from reliance on the Russian energy sector. Additionally, these countries are expected to play a crucial role in the Trans-Caspian International Transport Route (TITR), also known as the ‘Middle Corridor.’