What is UK CBAM

What

The Carbon Border Adjustment Mechanism (CBAM) is a UK policy that applies an equivalent carbon price to certain imported goods. The UK version takes effect on 1 January 2027.

Why

CBAM prevents carbon leakage: the risk that domestic manufacturers move production overseas to avoid UK carbon pricing. By applying a comparable carbon cost to imports, the policy levels the playing field between UK producers and foreign suppliers.

Who is affected

UK importers of goods in the following sectors:

• Steel and iron
• Aluminium
• Cement
• Fertiliser
• Hydrogen

How it works

1. Register with HMRC as a CBAM-liable importer.
2. Report embedded emissions: annually during 2027, then quarterly from 2028 onwards.
3. Pay the CBAM levy at a rate set per sector, per quarter, derived from the UK ETS price adjusted for free allocation.

Key numbers

• £50k threshold: you must register if you expect £50,000 of CBAM goods in the next 30 days, or reach £50,000 over the rolling 12 months (checked on the 1st of each month). Imports before 1 January 2027 do not count.
• £35–£55/tCO₂e: the CBAM rate our estimates use.
• Default values: if you cannot provide verified emissions data, default values apply. These figures use default emission values. HMRC hasn't published UK values yet, so we use the European Commission's published defaults where they exist and sector averages otherwise. If your suppliers emit less than the default, you're overpaying, and verified supplier data is how you prove it.

For the full regulatory text, see the official HMRC CBAM guidance.