BRICS backs carbon market cooperation while opposing unilateral CBAM
On September 12, 2026, the BRICS bloc adopted the New Delhi Declaration at its 18th summit. The statement endorsed deeper cooperation on carbon markets between member states. At the same time, it rejected unilateral carbon border adjustment mechanisms imposed by individual countries. The timing matters because the UK plans to launch its own CBAM on January 1, 2027. Meanwhile, the EU's CBAM has already entered its definitive phase as of January 1, 2026.
For UK businesses that import goods from BRICS economies or export to them, this diplomatic positioning has direct commercial consequences. Carbon border policies are no longer just environmental regulation. They now sit at the intersection of climate action, trade policy, and geopolitical alignment. Companies caught in the middle face new compliance costs, data requirements, and potential market friction.
BRICS endorses carbon market partnership while opposing border levies
The New Delhi Declaration confirmed BRICS support for a BRICS Carbon Markets Partnership. This initiative is designed to share expertise, build capacity, and support national climate strategies across member states. The partnership focuses on cooperation rather than unilateral enforcement. It emphasizes exchanging experience and developing domestic carbon pricing infrastructure.
However, the declaration also described carbon border adjustment mechanisms as "unilateral, punitive, discriminatory and protectionist." BRICS members argued that such measures can be inconsistent with international law. They also raised concerns about the impact on developing countries. The group's position is that climate policy should be coordinated multilaterally, not imposed by wealthy economies through trade mechanisms.
This dual stance reflects a strategic calculation. BRICS countries recognize the importance of carbon markets for climate action. Nevertheless, they oppose border carbon taxes that they view as shifting adjustment costs onto exporters in the Global South. The partnership aims to build negotiating leverage and technical capacity in advance of further climate-trade disputes.
The bloc includes Brazil, Russia, India, China, and South Africa, along with newer members. Together, these economies represent major global manufacturing capacity and significant export volumes to the UK and EU. Consequently, their collective rejection of CBAMs signals potential trade tension rather than quiet compliance.
UK carbon border levy starts in January 2027
The UK government has confirmed that its CBAM will begin on January 1, 2027. Initially, the scheme will apply to imported goods in five sectors: aluminium, cement, fertiliser, hydrogen, and iron and steel. Further scope extensions remain under review. The government has not yet published a final timeline for expanding coverage to other materials.
According to official guidance, the UK CBAM is designed to ensure that imported goods face a carbon price comparable to what UK producers pay under domestic climate regulations. The government states that the policy will reduce carbon leakage. This refers to the risk that emissions-intensive production simply shifts to countries with weaker climate rules, leaving global emissions unchanged or higher.
In practice, importers will need to account for the embedded carbon in covered goods. They will also need to provide verified emissions data and, in due course, surrender CBAM certificates to cover the carbon content of their imports. The exact mechanics of certificate pricing, verification requirements, and exemptions are still being finalized. However, the deadline is fixed.
For manufacturers and distributors that source materials from BRICS countries, this means immediate preparation is required. Specifically, you will need supplier emissions data, third-party verification processes, and internal systems to manage certificate compliance. Delay increases the risk of supply chain disruption or unexpected costs when the scheme goes live.
EU border carbon rules already in force
The EU moved faster. Its CBAM entered a transitional phase on October 1, 2023. During this period, importers were required to report embedded emissions but did not yet face financial charges. The definitive phase began on January 1, 2026. From that date, importers must surrender CBAM certificates corresponding to the emissions embedded in covered goods.
The EU scheme also covers aluminium, cement, fertiliser, hydrogen, and iron and steel. Additionally, it includes electricity imports. The definitive regime is linked to the phasing out of free allowances under the EU Emissions Trading System. As domestic producers lose free allocations, border levies on imports ramp up in parallel. This is intended to maintain competitive balance.
Importers into the EU must now register with national authorities, calculate emissions using approved methodologies, and purchase certificates at a price linked to the EU ETS carbon price. The administrative burden is significant. Moreover, errors or incomplete data can result in penalties or delays at the border.
Because the EU and UK schemes run on similar timelines and cover overlapping sectors, businesses that trade with both markets face dual compliance. This is particularly challenging for SMEs without in-house sustainability teams. Furthermore, suppliers in BRICS countries may be unfamiliar with the data standards required, adding another layer of complexity.
What UK businesses need to know now
- BRICS adopted the New Delhi Declaration on September 12, 2026, endorsing a BRICS Carbon Markets Partnership and opposing unilateral CBAMs.
- The UK CBAM will start on January 1, 2027, covering aluminium, cement, fertiliser, hydrogen, and iron and steel.
- The EU CBAM entered its definitive phase on January 1, 2026, following a transitional reporting period that began in October 2023.
- Importers of covered goods must provide verified emissions data and, under the UK scheme, surrender CBAM certificates to account for embedded carbon.
- BRICS countries described CBAMs as "unilateral, punitive, discriminatory and protectionist," signaling potential trade friction rather than cooperation.
- Businesses that import from BRICS economies or export to them should anticipate increased compliance costs, data requests from suppliers, and possible diplomatic or regulatory challenges.
Supply chain and cost exposure for importers
If you import steel, cement, aluminium, fertiliser, or hydrogen from countries such as China, India, Brazil, or South Africa, you are directly affected. From January 2027, you will need verified emissions data for each consignment. Without it, you may face default carbon intensity values, which are typically higher and therefore more expensive.
Securing this data is not straightforward. Many suppliers in BRICS countries do not routinely measure or report carbon intensity at product level. Consequently, you may need to fund audits, provide technical assistance, or switch suppliers entirely. Each option carries cost and time implications.
Additionally, the carbon price itself is a new input cost. The UK has not yet published final certificate pricing, but it is expected to track domestic carbon pricing mechanisms. If the carbon price rises, so does your CBAM liability. This introduces a new source of volatility into cost forecasting.
For businesses tendering for public sector contracts, carbon reporting and CBAM compliance will increasingly feature in procurement criteria. Under Procurement Policy Note 06/21, suppliers must publish carbon reduction plans. Border carbon liabilities and embedded emissions in imported materials will form part of that assessment. Therefore, poor CBAM compliance could exclude you from contract opportunities.
There is also reputational risk. Customers and investors are scrutinizing Scope 3 emissions, which include purchased goods. High embedded carbon in imports can damage sustainability credentials, even if you comply with CBAM rules. As a result, some businesses are already shifting sourcing strategies toward lower-carbon suppliers or regions with established carbon pricing.
Geopolitical friction and regulatory uncertainty
The BRICS declaration does not just oppose CBAMs in principle. It also frames them as potentially discriminatory and inconsistent with international law. This language suggests that BRICS members may challenge border carbon mechanisms through the World Trade Organization or other forums. Such challenges could delay implementation, trigger retaliatory measures, or force amendments to UK and EU schemes.
For businesses, this means regulatory uncertainty. The rules may change as diplomatic and legal pressure builds. Compliance systems built today may need updating tomorrow. Consequently, flexible internal processes and close monitoring of policy developments are essential.
There is also a risk of market fragmentation. If BRICS countries develop their own carbon market infrastructure under the partnership, they may resist alignment with UK or EU methodologies. This could result in incompatible verification standards, double counting, or conflicting carbon pricing. Businesses operating across both blocs would face higher administrative costs and compliance complexity.
On the other hand, the BRICS Carbon Markets Partnership could eventually provide a foundation for mutual recognition agreements. If BRICS members establish credible domestic carbon pricing, UK and EU regulators may offer exemptions or reductions in CBAM liabilities. However, that outcome remains speculative. For now, businesses should plan for divergence rather than convergence.
Preparing for CBAM compliance before January 2027
Start by mapping your supply chain. Identify which imported goods fall into the covered sectors. Then establish where those goods originate. If you source from BRICS countries, prioritize those suppliers for emissions data requests. The earlier you begin, the more time you have to resolve data gaps or find alternative suppliers.
Next, engage suppliers directly. Explain the emissions data requirements and the verification standards they must meet. Offer technical support if needed. Some suppliers may be unfamiliar with carbon accounting or lack the systems to generate the required reports. Building that capability takes time, so early engagement is critical.
You should also review your contracts. Consider whether CBAM costs will be borne by you or passed back to suppliers. Clarify responsibility for data provision and verification. Include clauses that allow for price adjustments if carbon costs change. These contractual protections can reduce financial exposure and avoid disputes later.
Invest in internal systems or external support. You will need processes to collect, verify, and report emissions data at scale. For many SMEs, this is beyond existing resource. Consequently, you may need software, consultancy support, or training to meet the requirements. Our net zero program for carbon reporting compliance helps businesses build the data systems and reporting processes required for CBAM and broader climate regulation.
Finally, monitor policy developments closely. The UK government has not yet published all the detailed regulations, and the BRICS position may trigger further negotiation or delay. Subscribe to updates from the Department for Energy Security and Net Zero and review guidance as it is released. Early awareness of rule changes gives you time to adapt.
Where to find authoritative guidance and updates
The UK government publishes policy updates and technical guidance through the Department for Energy Security and Net Zero. You can find the latest information on the UK CBAM, including sector scope and compliance timelines, on the official gov.uk page.
For the EU scheme, the European Commission provides detailed guidance on registration, emissions calculation methodologies, and certificate surrender requirements. This is available through the EU CBAM portal.
If you are involved in public sector supply chains, refer to Procurement Policy Note 06/21 for requirements on carbon reduction plans. This sets out how carbon performance will be assessed in major government contracts.
For broader support on carbon reporting, emissions data, and ESG compliance frameworks, we offer practical tools and advisory services tailored to UK SMEs. These resources are designed to help you meet regulatory requirements without diverting resource from core business operations.