EU CBAM to Penalise UK Renewable Power Exports

British wind and solar power exports to Europe could face CO2 fees from 2026 under the current design of the EU’s CBAM, sources told Reuters.

• The EU’s CBAM will impose CO2 emissions fees on European imports of steel, cement, aluminium, fertilisers, power and hydrogen, unless the exporting country has equal CO2 pricing policies.
• Under the current design, the CO2 fee for power imports would be calculated using default value based on average and historic power generation emissions – which would unfairly penalise renewable energy.
• As much as 3GWh of renewable energy exports from the UK to Europe could be curtailed under the current design, Aurora Energy Research said.
• The CO2 charges could not only hit revenues of British renewable project but could also lift European power prices, sources told Reuters.
• "It's a problem on both sides," said Adam Berman, deputy director of industry group Energy UK.
• "(It) disincentivises clean power in the UK at the moment in which we're trying to ramp up provision of clean power, and it's going to increase (power) prices in northern Europe”, Berman added.
• "It is an issue that we are conscious of and one that we have raised, that the UK has raised, with the EU," Catherine Stewart, the UK Treasury's deputy director for trade policy, said in May.
• A European Commission spokesperson said it would continue talks with all countries, including the UK, on the design of the carbon levy before finalising its application from 2026.
• "The best way to deal with the (CBAM), and to stop the UK exporters paying a tax to the EU that could otherwise go into the UK budget, would be by having (carbon market) linking," SSE'S Group Head of Policy and Advocacy, Alistair McGirr, said.