EU–UK ETS Linkage Timeline Remains Uncertain
CBAM continues to shape international discussions — from the uncertain timeline for EU–UK ETS linkage, to its economic impact on Bosnia and Herzegovina, industry pushback in the aluminium sector, and trade negotiations with India.
At a Glance:
- EU–UK ETS Linkage Timeline Remains Uncertain
- Bosnia and Herzegovina (BiH) May Face €1.6 Billion in CBAM Costs
- Aluminium Industry Expresses Concerns Over CBAM Design Flaws
- India and EU Advance Dialogue on CBAM During FTA Talks
EU–UK ETS Linkage Timeline Remains Uncertain
While the UK and EU agreed at their 19 May 2025 summit to begin formal work on linking their respective emissions trading systems (ETSs), no firm timeline has been established. Previous linkage experience between the EU and Switzerland suggests that full linkage could take several years due to the complexity of aligning regulatory frameworks and infrastructure.
As noted in a recent article by S&P Global Commodity Insights, Carbon Glance CEO Víctor Pérez Prieto commented that the linkage is unlikely to be completed before the EU CBAM enters its definitive phase in 2026, citing the time required to resolve regulatory and infrastructure-related challenges. This leaves UK exporters potentially exposed to EU carbon border charges in the near term.
Bosnia and Herzegovina (BiH) May Face €1.6 Billion in CBAM Costs
In an analysis prepared at the request of the Ministry of Foreign Trade and Economic Relations of Bosnia and Herzegovina, it was estimated that if CBAM and an ETS are both implemented starting in 2026, the country’s economy could face financial losses ranging from BAM 722 million (EUR 369 million) to BAM 3.17 billion (EUR 1.62 billion) between 2026 and 2030.
The authors analyzed four scenarios based on carbon prices ranging from EUR 118.53 to EUR 147.22 per ton, with the electricity sector bearing the highest costs under all four models.
Prime Minister Nermin Nikšić said that the country cannot rely on a potential delay in the introduction of CBAM and must create conditions to generate sufficient energy from renewable sources to ensure that industry does not incur taxes when exporting its products to the EU.
Aluminium Industry Expresses Concerns Over CBAM Design Flaws
The Spanish Aluminium and Surface Treatments Association (Asociación Española del Aluminio y Tratamientos de Surficie), representing over 650 companies, has urgently called for a revision of the CBAM framework, warning that current design rules could increase aluminium production costs in Europe by 24–31%. The group argues that this threatens the competitiveness of the sector and risks accelerating deindustrialisation and job losses.
These concerns echo those recently raised by EUROPEAN ALUMINIUM, which commissioned a study identifying three critical issues to prevent CBAM from harming the European aluminium industry:
- Scrap loophole: The exclusion of aluminium scrap from CBAM's scope assigns it a zero-emissions value, potentially enabling importers to over-declare scrap content to lower their carbon costs, and non-EU producers to export products with a higher scrap content to the EU market (resource shuffling).
- Alumina inclusion: Bringing alumina under CBAM could increase its marginal price in the EU and EEA by 12–16% by 2030, and up to 24% by 2034, according to the study, undermining EU-based aluminium producers who rely on this input.
- Indirect emissions: Including indirect emissions in CBAM for aluminium would further raise costs and increase the market premium on aluminium products in Europe, driving up prices across all downstream markets.
India and EU Advance Dialogue on CBAM During FTA Talks
India and the EU are negotiating a comprehensive free trade agreement (FTA), with CBAM constituting an ongoing discussion point. The EU has been engaging with India to ensure the effective and seamless implementation of CBAM, with both parties expressing a mutual commitment to deepen technical-level discussions and maintain ongoing dialogue throughout the current transitional period regarding the mechanism's impact on Indian firms.
As highlighted in a paper published by the Centre for Social and Economic Progress, the EU CBAM may have an adverse impact for some sectors in the short term, especially given that India ranks among the top ten steel exporters to the EU, and multiple exporters to the EU source relevant precursors from India. However, the authors conclude that CBAM could serve as a catalyst for India to accelerate its transition to a greener economy and boost its global competitiveness.
Within this context, India has already indicated it may impose retaliatory duties if the EU enforces the carbon tax on Indian goods.
Planning Ahead: Navigating CBAM
With CBAM shaping international trade and policy, importers must prepare for its definitive phase starting in 2026. To support readiness, we’ve published a practical guide outlining key requirements and timelines.