UK and EU sustainability regulation and carbon policy updates

Carbon Budget 7 proposes a limit of 535 MtCO2e for the 2038 to 2042 period.

Businesses should expect stronger pressure to reduce emissions, improve data quality, electrify operations and provide evidence in procurement.

The definitive period increases the importance of embedded carbon data for covered goods imported into the EU.

Companies need stronger product level emissions data, supplier evidence and reporting processes for carbon intensive goods.

UK CBAM will apply to selected goods, with default emissions values expected for each CBAM good.

UK businesses should prepare supplier data, product carbon information and internal reporting processes before 2027.

PackUK confirmed that invoices would be sent to obligated producers from October 2025, with quarterly payments continuing into 2026.

Businesses need accurate packaging data, material classification, recyclability evidence, finance preparation and cost forecasting.

The mandate starts at 2 percent in 2025, rising to 10 percent in 2030 and 22 percent in 2040.

Aviation related businesses need better visibility of fuel emissions, Scope 3 impacts, infrastructure readiness and cost exposure.

The aviation sector moves away from free allowances, creating a stronger carbon cost signal.

Airlines and aviation stakeholders need stronger efficiency, SAF, data tracking and emissions reduction planning.

The UK ETS expands to maritime, covering domestic journeys and emissions while in UK ports for vessels of 5,000 gross tonnage and above.

Shipping carbon costs and emissions reporting may affect logistics planning, procurement decisions and Scope 3 transport calculations.

The amendment order sets out the expansion of UK ETS to domestic maritime activities.

Operators may need stronger monitoring, reporting and verification processes for maritime greenhouse gas emissions.