- CBAM
- Carbon Border Adjustment Mechanism. A policy that applies a carbon price to certain imported goods to prevent carbon leakage.
- UK ETS
- UK Emissions Trading Scheme. The UK carbon market that sets the domestic carbon price. The CBAM rate is derived from it per sector, per quarter, adjusted for free allocation, so it is lower than the UK ETS price itself, not equal to it.
- Embedded emissions
- The total greenhouse gas emissions generated during the production of a good, including direct emissions from the manufacturing process and, in some cases, indirect emissions from electricity used.
- Carbon leakage
- The risk that businesses relocate production to countries with less stringent climate policies, resulting in no net reduction in global emissions.
- Default emission factor
- The value set by HMRC for each product, used where verified supplier data is not available. 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.
- Verified emission factor
- An emission factor that has been independently verified by an accredited third party. It lowers the levy where a supplier's actual emissions are below the default value.
- SAO
- Senior Accounting Officer. The individual within a large company who is personally responsible for appropriate tax accounting arrangements. The taxes covered are listed in Schedule 46 to the Finance Act 2009, and CBAM is not among them.
- Reporting period
- The time period covered by a single CBAM return. Annual during 2027, then quarterly from 2028 onwards.
- Carbon price credit
- A deduction applied to the CBAM levy where the country of origin already charges an equivalent carbon price on the goods being exported.
- Commodity code
- An 8-digit code used in UK customs declarations to classify imported goods. CBAM scope is determined by whether a commodity code falls within covered sectors.
- CN code
- Combined Nomenclature code. The EU equivalent of the UK commodity code system, used in EU CBAM regulations.
- HMRC
- His Majesty's Revenue and Customs. The UK government body responsible for administering CBAM registration, reporting, and levy collection.
- tCO₂e
- Tonnes of carbon dioxide equivalent. The standard unit for measuring greenhouse gas emissions, normalising different gases to their CO₂-equivalent warming potential.
- Registration threshold
- £50,000 of CBAM goods, with two tests: expecting £50,000 in the next 30 days, or reaching £50,000 in the rolling 12 months, checked on the 1st of each month. Below this, CBAM obligations do not apply.
- Installation
- A physical production facility (e.g. a steel mill or cement plant) where CBAM-scope goods are manufactured. Emissions data is reported at the installation level.