The EUs Carbon Border Adjustment Mechanism (CBAM) is due to come into force on 1 January 2026, whilst the UK is planning to introduce its own CBAM a year later on 1 January 2027. Following the UK-EU Reset in May, there is also an agreement to try to link the CBAMs and Emissions Trading Schemes (ETS) for each jurisdiction.

However, whilst alignment on these issues and a wider package of measures agreed in principle at the UK-EU Reset will take months – if not years – to work through, the introduction of the EU’s CBAM in under three months time would mean increased costs for British businesses, and would likely be passed on to British citizens.

But a report in the I paper yesterday suggests the UK and EU are hammering out a deal for a ‘temporary fix’ ahead of getting the wider deal over the line. If a fix can be found, it would aim to reduce costs on British businesses and avoid further complications on the consequences of a new regulatory border for Northern Ireland.

You can read the full story (and see a useful short explainer on how CBAMs work) in the I paper.

For more on the differences between the UK and EU CBAMs, read our recent divergence update.

Photo by Marcin Jozwiak on Unsplash