A carbon border adjustment mechanism (CBAM) is a charge on imports based on the greenhouse gases emitted when the goods were made. Its purpose is to stop “carbon leakage”, where production moves to countries with weaker climate rules, by giving imported goods a carbon cost comparable to the one domestic producers pay.
The UK CBAM
The UK CBAM starts on 1 January 2027 and is administered by HM Revenue and Customs. It applies to specified goods, identified by commodity code, in five sectors:
| UK CBAM | EU CBAM | |
|---|---|---|
| Applies from | 1 January 2027 | 1 January 2026 |
| Aluminium, cement, fertiliser, hydrogen, iron and steel | Yes | Yes |
| Electricity | No | Yes |
Glass and ceramics, proposed in 2023, are not included from 2027. Importers must register once imports of these goods exceed £50,000 over 12 months.
The charge is per tonne of emissions embodied in the goods. The rate is designed to match the carbon price UK producers face under the UK Emissions Trading Scheme, after allowing for their free allowances. Importers can reduce what they owe if a carbon price was already paid in the country of production. The first accounting period covers the whole of 2027, with payment due by the end of May 2028; after that, periods are quarterly. Indirect emissions from the electricity used in production will not be covered before 2029.
The EU CBAM in brief
The EU ran a reporting-only transitional phase from 2023 to 2025. Its definitive regime has applied since 1 January 2026 and covers cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. UK exporters of these goods to the EU are therefore already affected. Linking the UK and EU carbon markets could open the way to mutual exemptions, but that would require a linking agreement to come into force first.
Read more: Green hydrogen: how it is made and what the UK plans to use it for.