Revealed — the next Brexit headache on the Irish border

EU officials take the view that the bloc’s CBAM should apply to Northern Ireland, one person familiar with decision-making in London and Brussels, granted anonymity to speak candidly about the policy, told POLITICO. The U.K. government — despite having no public position — is opposed to the idea, they said.

A European Commission official, also speaking on condition of anonymity, said that, given U.K. policy has yet to be finalized, Brussels needs more time and information before it considers its response. “We have not seen the details on what the U.K. initiative will look like,” they said. “It’s much too early to speculate about the how the two measures could interact.”

On the plus side, there has been a “softening of the mood” towards linking systems, and a sense of “renewed goodwill” between Brussels and Westminster as a result of the Windsor Framework negotiations and the global energy crisis, said Berman.

But potential negotiations could still be complex and lengthy. An agreement between the EU and Switzerland to link their ETSs took more than seven years.

A second official familiar with U.K. government decision-making hinted at a separate split inside Whitehall over the best way forward. The Department for Energy Security and Net Zero is pushing for linking emissions systems on the same terms as Switzerland, they said, but responsibility ultimately rests with the Treasury — where there has been more resistance from ministers cautious about the U.K.’s ability to carve its own regulations post-Brexit.

A Treasury spokesperson made clear that no final decisions had been made, and insisted Northern Ireland’s rights would be protected.

“The EU’s CBAM could only apply in Northern Ireland with the agreement of the U.K. and in line with the democratic safeguards of the Windsor Framework,” they said. “The Trade and Cooperation Agreement leaves open the possibility of linking the U.K. and EU schemes. The government is considering a range of options and, while we are open to exploring linking with other schemes, no decision on any preferred linking partners has yet been made.”

A Labour spokesperson declined to comment on the specific situation on the Irish border, saying only that the party supported the introduction of a U.K. CBAM and would “scrutinize the government’s plans to implement it.”