July 2026© 2026 International Institute for Sustainable Development | IISD.org The State of Border Carbon Adjustments 2026 IISD REPORT© 2026 International Institute for Sustainable Development Published by the International Institute for Sustainable DevelopmentThis publication is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.International Institute for Sustainable DevelopmentThe International Institute for Sustainable Development (IISD) is a globally recognized think tank with 3 decades of experience working to solve the world’s most pressing sustainable development challenges. We combine deep expertise in a wide range of issues with a collaborative approach to research, policy advice, and hands-on support to ensure these solutions are brought to life. Headquartered in Winnipeg, Manitoba, we are a diverse team of over 300 professionals working from offices in Canada, Switzerland, and other locations around the world. IISD’s headquarters in Winnipeg are situated on Treaty 1 Territory—the ancestral lands of the Anishinaabe (Ojibwe), Ininiw (Cree), Anisininew (Ojibwe Cree), Dene, and Dakota Nations, and the homeland of the Red River Métis Nation. IISD is a registered charitable organization in Canada and has 501(c)(3) status in the United States. IISD receives core operating support from the Province of Manitoba and project funding from governments inside and outside Canada, United Nations agencies, foundations, the private sector, and individuals. The State of Border Carbon Adjustments 2026 July 2026Written by Satish Triplicane (policy advisor, International Institute for Sustainable Development [IISD]), Aaron Cosbey (senior associate, IISD), Ieva Baršauskaitė (Lead, Trade and Green Transition, IISD), George Riddell (Managing Director, Goyder Ltd), and Maria Alejandra Gonzalez Pinto.Photo: iStockAcknowledgementsThe authors would like to thank Alice Tipping, Antoine Bonnet, and Antonella Pasetto (Climate Club Secretariat, OECD) for their valuable contributions throughout the development of this publication.The authors also thank the European Climate Foundation for its generous support.Head Office111 Lombard Avenue, Suite 325Winnipeg, ManitobaCanada R3B 0T4iisd.orgIISD.org iiiThe State of Border Carbon Adjustments 2026Table of Contents1.0 Overview ...........................................................................................................................................................................12.0 The EU CBAM ................................................................................................................................................................ 42.1 Context ............................................................................................................................................................................................... 42.2 Key Characteristics and Impacts ....................................................................................................................................73.0 The UK CBAM...............................................................................................................................................................113.1 Context ............................................................................................................................................................................................. 113.2 Key Characteristics and Impacts ................................................................................................................................124.0 Australia’s Carbon Leakage Review ................................................................................................................ 164.1 Context .............................................................................................................................................................................................164.2 Key Characteristics and Impacts ...............................................................................................................................165.0 BCA Developments in Other Countries ......................................................................................................... 196.0 WTO Discussions ......................................................................................................................................................217.0 Watching This Space: BCA-related discussions in other forums ....................................................267.1 ISO/GHG Protocol .....................................................................................................................................................................267.2 OECD Inclusive Forum on Carbon Mitigation Approaches .....................................................................267.3 Climate Club .........................................................................................................
