On the day of the Chancellor’s Growth speech [29 January 2025], Energy UK is urging the UK Government to maximise cooperation with the EU on climate change to avoid serious impacts on the UK economy.
In ‘Borderline Confusion – Carbon Border Adjustment Mechanisms in Northern Ireland’, Energy UK highlights the impact of the EU’s forthcoming Carbon Border Adjustment Mechanism (CBAM) on the Northern Irish economy.
From 1 January 2026, the EU CBAM will become fully active. Goods crossing from Great Britain to Northern Ireland, and those produced in Northern Ireland but exported to the Republic of Ireland or other EU countries, will have to pay a new levy consistent with the EU’s domestic carbon price: the EU Emissions Trading System.
Energy UK analysis highlights that the implications of the EU CBAM on Northern Ireland are likely to be disruptive, expensive, and highly controversial. These include:
- New payments of up to £200 million annually – equivalent to £1bn over the course of a Parliament – on trade between Great Britain and Northern Ireland.
- Higher energy bills on the island of Ireland – equivalent to £45/year per household in Northern Ireland.
- More than 1,100 Northern Irish jobs are vulnerable to the EU CBAM, more jobs than were secured in the recent purchase of the Harland & Wolff shipyard.
The paper argues that the solution to this problem is through linking the UK and EU Emissions Trading Systems, which would negate the need for a CBAM between the UK and EU. There is strong industry and civil society consensus for linkage, and Energy UK is urging the UK and EU to instigate linkage negotiations following the forthcoming UK-EU summit in March/April.
Energy UK’s Director of Policy and Advocacy, Adam Berman:
“There’s no avoiding the fact that the EU CBAM is likely to have a significant impact on Northern Ireland’s economy. From higher energy bills to more expensive products on the shelves, Northern Irish consumers will pay the price if this issue is not resolved.
“The only way to avoid the damage to Northern Ireland’s economy is through linking the UK and EU Emissions Trading Systems. The existing UK-EU Trade and Cooperation Agreement opens the door to linkage, but it’s time for both sides to walk through.
“With less than a year until the EU CBAM is fully active, there’s no time to lose. The cost of inaction is clear; linkage is the only way to ensure that Northern Irish businesses and households avoid hundreds of millions in extra costs.”
ENDS
For further information on the wider economic cost of not linking the UK and EU Emissions Trading Systems:
- Read our explainer which highlights the cost of the UK-EU relationship for energy
- Read our report “The Power of Partnership” which sets out the economic benefits of greater cooperation between the UK and the EU
- Speak to one of our team. If you’re a journalist – feel free to get in touch on press@energy-uk.org.uk