UFE’s reply to the EC call for evidence CBAM – Carbon price paid in a third country

UFE supports the principle underlying the Carbon Border Adjustment Mechanism, as it aims to preserve the competitiveness of European industry and to prevent carbon leakage, in a context of increased climate ambition at European level. However, in the case of electricity imports, UFE has identified two main issues that should be addressed with regard to the carbon price paid in a third country.

First, UFE has been calling for the linking between the EU ETS and the UK ETS. Without a proper partnership, the implementation of CBAM on electricity imports from Great Britain would lead to several negative consequences. For instance, electricity contracts have already been concluded on futures markets, with delivery beyond the start of the final CBAM period (January 2026). The uncertainty related to the lack of visibility on the treatment of the carbon price paid in a third country (delayed secondary legislation) can negatively affect these market horizons, leading to a decrease in liquidity. Linking the EU ETS with the UK ETS is thus essential. Discussions aimed at establishing the coupling of the two systems are crucial to find the right conditions and may take time to get finalised.