Headlines
EU rules out UK exemption from carbon border levy until markets link
Published by Global Banking and Finance Review
Posted on December 17, 2025
2 min readLast updated: January 20, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on December 17, 2025
2 min readLast updated: January 20, 2026
The EU will not exempt the UK from its carbon border levy until their carbon markets are linked, affecting UK industries with significant costs.
By Kate Abnett and Susanna Twidale
BRUSSELS, Dec 17 (Reuters) - The European Union will not exempt Britain from its CO2 emissions fee on imported goods until the two sides link their carbon markets, the bloc's climate chief said on Wednesday.
British industries had hoped to get a temporary exemption from the EU's carbon border adjustment mechanism (CBAM) while the carbon market linkage negotiations are underway.
The UK government has said the EU levy will cost its industry 800 million pounds a year.
EU Climate Commissioner Wopke Hoekstra said Britain would not be exempted from the carbon border levy until its carbon market was linked to the EU's - a process officials say could take more than a year.
"We're not exempting anyone, but the moment we will be fully linking those two, it is likely that there will be an exemption at that point in time," he said.
The UK Cabinet Office did not immediately respond to a request for comment.
Hoekstra said Brussels was aware the UK government "would have ... liked a different order to this whole set of events".
"But that is something unfortunately we cannot change," Hoekstra said, adding that the EU would work constructively with the UK to link the carbon markets.
The EU CBAM will start imposing fees on the bloc's imports of goods including steel and cement from January. But companies have until a September 2027 deadline to buy CBAM certificates to cover their 2026 emissions and submit them to the EU.
(Reporting by Kate Abnett, Susanna Twidale; editing by Louise Breusch Rasmussen and Louise Heavens)
The carbon border adjustment mechanism (CBAM) is a policy by the European Union that imposes fees on imported goods based on their carbon emissions to encourage sustainability and reduce carbon leakage.
A CO2 emissions fee is a charge imposed on companies based on the amount of carbon dioxide they emit, aimed at incentivizing reductions in greenhouse gas emissions.
The EU Climate Commissioner is responsible for overseeing the EU's climate policies, including initiatives like the carbon border adjustment mechanism and ensuring member states comply with environmental regulations.
CBAM certificates are permits that companies must purchase to cover their carbon emissions when importing goods into the EU, aimed at promoting fair competition and environmental responsibility.
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