Afry : Impact of the EU Carbon Border Adjustment Mechanism (CBAM) on electricity imports from Great Britain

AFRY Management Consulting has published a report summarising its assessment of the impact of the EU Carbon Border Adjustment Mechanism (CBAM) on electricity imports from Great Britain.

The study was commissioned by a group of interconnector businesses and transmission companies to provide an independent assessment of the potential effects of EU CBAM.

The study identifies two issues with the method of application of CBAM to electricity imports from GB:

1. Risk of significant over-statement of emissions assumed for electricity imports from GB, as values based on carbon intensity of historic fossil fuel generation are likely to be applied.
2. Excessive carbon price exposure for imports from GB, linked to practical obstacles to demonstration of a carbon price having been paid in GB by emitting generation and exposure of GB zero-carbon generation to carbon costs.

These issues unduly increase the cost of electricity imports into the EU from GB, presenting the following adverse outcomes:

1. Putting at risk development of offshore grid/cross-border infrastructure needed for the energy transition;
2. Harming delivery of decarbonisation policies; and
3. Frustrating efficient market operation.