It’s understood that the UK and EU are working on temporary mechanisms to protect UK businesses from CBAM – ahead of the UK’s own version of the levy coming into force in 2027.
The Guardian – which ‘understands’ but doesn’t quote sources – says a temporary deal to shield UK exporters from the levy’s impact is now viewed by both sides as likely.
An agreement would be a boom for businesses which rely on trade with the EU. Campaigners have long warned that divergence between the EU and UK on carbon taxes could cost jobs and investment.
The Carbon Border Adjustment Mechanism (CBAM) is an EU regulation designed to prevent carbon leakage, and ensure fair competition between EU industries and non-EU producers who have less stringent climate regulations. It was due to enter full compliance mode in 2026 and meant – at its most simplest – that marine companies that export to the EU needed to be on top of the amount of carbon emitted during the production of their goods. There are more details and an explainer about CBAM in the article linked below.
Stephen Doughty, a Foreign Office minister, told some delegates at the recent Labour party conference that ministers are pursuing “a wider reset with all of Europe” … and …. “this is about Britain back on the world stage, back on the European stage, and a partner for peace, for prosperity and progress.”
A Cabinet Office source told the Guardian: “We aren’t going to get ahead of negotiations, nor provide a running commentary.”
Naomi Smith, CEO of Best for Britain (which has a plan to fix the problems Britain faces after Brexit) says: “Some of Britain’s biggest international investors have warned that divergence between the EU and UK on carbon taxes could cost jobs and investment.
“This common-sense move will reduce costs and admin for businesses in the EU and UK while helping to boost economic growth in Britain. The government must now work with our European allies to fully align Britain’s own carbon tax regime to secure these benefits for the long term.”
Preparations for CBAM a mixed bag in marine industry
Back in February this year Lesley Robinson, CEO, British Marine, told MIN that preparation for the EU’s Carbon Border Adjustment Mechanism (CBAM) remains a mixed picture in the UK marine industry.
“Some companies have made great strides in understanding the requirements,” she said. But for others, particularly smaller businesses with complex or global supply chains, “CBAM is still a considerable challenge.”
In May 2024, Daniamant Denmark’s CEO Berit Hansen told MIN that she believed legislation in general is good [in the market]. “But the marine industry is very conservative. It takes long time to make changes, both to existing regulations or new regulations,” she said before lambasting CBAM.
“Some of the new EU legislations like CBAM [the EU’s Carbon Border Adjustment Mechanism] or registration of working hours per employee, is time consuming with no benefit to the company. We do not earn more money but we get to have more administration staff.”
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