UK and EU take first steps towards linking their ETS

The UK and the EU have agreed to start working on linking their Emissions Trading Systems (ETS).

The announcement, made at the 19 May UK-EU Summit, signals a new era of cooperation on climate and trade. In a key concession, the UK committed to matching the EU's ambition on climate – which would help close the gap between the two regions' carbon prices.

If successful, ETS linkage could pave the way for CBAM to be waived between the UK and the EU, a long-standing demand from industry groups. According to a report by Frontier Economics, the linkage could save UK businesses up to £800 million in carbon border taxes. But the real savings lie in reduced administrative costs for cross-border trade. It would also provide long-overdue clarity on Northern Ireland's status under carbon border fee rules.

And yet the implementation details remain uncertain. A final agreement could take years, leaving UK exporters exposed in the early years of EU CBAM.

European Parliament overwhelmingly adopts new 50 tons threshold

The European Parliament has approved the CBAM Omnibus Regulation, including the key 50-tonne annual threshold and other reporting simplification measures from the Omnibus proposal.

The Commission's simplification proposals won the support of MEPs from across the political spectrum. A few amendments, mostly suggesting to further raise the threshold, were proposed but overwhelmingly rejected.

The vote follows calls from Antonio Decaro, Rapporteur of the Environment, Climate and Food Safety Committee (ENVI), to “speed up the work” and conclude negotiations before the end of June. The last step before new rules apply is a formal endorsement by the Council of Europe.

To ensure swift publication of the final decision, broader reforms—like export rebates or anti-circumvention rules—will be handled separately in new legislative proposals.

While many implementation details are still under development, confirmed simplifications will bring much-needed clarity to businesses looking to prepare their procurements for 2026.

CBAMBOO wins the European Supply Chain Startup Contest 2025!

We are thrilled that CBAMBOO has won the 2025 European Supply Chain Startup Award in Amsterdam last week.

At the inNOWvate Supply Chain annual conference hosted by Supply Chain Media, the urgency to provide supply chain professionals with reliable systems to plan for carbon pricing caught the audience's attention.

In front of 200+ supply chain and procurement professionals, we made the case for a smarter, operational approach to carbon border taxes—and it resonated!

In a combined vote of both the public and a jury of experts, CBAMBOO was selected as the winner of this year’s European Supply Chain Startup competition.

We are beyond proud that our platform is being recognised as a vital tool to help supply chain teams navigate the new CBAM reality and a way to future-proof their business.

Watch the pitch on YouTube.

India fails to secure CBAM exemption in UK trade deal

India’s push for a carbon border tax exemption has failed. On 6 May, the UK and India struck a free trade agreement (FTA) after three years of negotiations—without concessions on the UK CBAM.

CBAM remained a sticking point throughout. At the Asian Development Bank’s annual meeting, Indian finance minister Nirmala Sitharaman called the policy a “repeat of colonialism” and criticised it as unfair to developing economies. Alongside China, India has accused CBAM of shifting decarbonisation costs onto emerging economies.

But the UK government is moving forward. The UK CBAM, due in 2027, will mirror the EU model and offer no blanket exemptions.

Exporters to the UK can claim discounts based on existing carbon pricing schemes. But although India is developing its own carbon market, initial carbon prices are projected at just $10 per ton, offering little relief under either the UK or EU CBAM. The scheme, expected to launch this year, will apply to 13 energy-intensive sectors, including steel, cement, and aluminium.

India is one of the EU’s top steel suppliers. Yet its slow industrial decarbonisation and nascent carbon pricing framework leave exporters exposed. The government has signalled it may retaliate if the UK or EU impose carbon duties on Indian goods.

Russia initiates first WTO challenge to carbon border adjustments

The Russian Federation has initiated a formal complaint against EU carbon border fee plans and emission trading systems on 19 May.

The move marks the first official legal challenge to the EU’s flagship trade-based climate instrument. However, it reflects long-standing concerns from BRICS nations, who have called CBAM a discriminatory measure and unfair trade practice.

The complaint initiates a 60-day window for bilateral talks with the EU and its member states. If unresolved, the case could escalate to a full WTO dispute.

The complaint targets both the CBAM design and the free allocations granted to export-oriented sectors under the ETS. European industries have repeatedly called for similar support for exporters of CBAM goods facing competitive disadvantages abroad. If the legal challenge succeeds, finding a compliant solution will prove even more complex.

Three key insights from the ODI policy forum

Last month, CBAMBOO joined EU policymakers and industry leaders in Brussels for a high-level CBAM forum. Discussions confirmed the European Commission is currently working on remaining implementation details. Here are three key insights:

1️⃣ Return of default values

From 2026, importers will have a choice between default and actual values again. However, the methodology will shift. Unlike current factors based on the 10% worst performing EU installations, a new list of country-specific values will be provided per product.

For countries with missing data, emissions from the 10% most carbon-intensive third-country producers will apply. As a result, from 2026, default emission factors will be significantly higher than those used during the reporting period. Additionally, an undetermined punitive markup will be added to the emission factor to incentivise data collection.

Importers should start collecting accurate emission data now to avoid significantly higher costs.

2️⃣ Simplified carbon price reporting

Unlike previously announced, importers will not be required to provide evidence of carbon prices paid in producing countries. To reduce administrative burdens, the EC will publish a list of standard carbon prices per country, sector and commodity.

3️⃣ CBAM scope expansion

A proposal released in December 2025 will suggest extension to downstream products made of current CBAM goods as well as new sectors. Downstream goods will including intermediary products such as automotive parts. As for new sectors, a policymaker confirmed the inclusion of the chemical industry on the list.

Newly added industries will not benefit from a transition period, however.

CBAMBOO is already working with stakeholders in at-risk sectors to identify compliance pathways and build robust reporting systems early.