The United Kingdom has confirmed the introduction of a Carbon Border Adjustment Mechanism (CBAM) starting January 1, 2027. This measure was officially announced in a government response published on October 30, 2024, following a public consultation launched in March 2024.
A Mechanism to Tax High-Carbon Imports
Similar to the European Union's CBAM, the UK will introduce a tax on greenhouse gas emissions associated with certain imported products. This tax will apply to imports from both the EU and non-EU countries. The UK authorities aim to prevent carbon leakage, meaning the relocation of emissions to countries with less stringent environmental regulations.
Sectors Concerned
The following sectors will be subject to the mechanism:
CBAM Obligations
Aluminium
Cement
Fertilisers
Hydrogen
Iron and steel
The UK CBAM will apply to imports exceeding a threshold of £50,000 over a consecutive twelve-month period. Affected businesses will be required to pay a tax on the embedded carbon in their imports, although the precise calculation method and reporting obligations have yet to be detailed by the UK authorities.
Next Steps
Before the CBAM takes effect in 2027, the UK government will need to clarify the reporting and payment requirements. Further consultations and regulatory publications are expected in the coming months to outline importers' obligations and how this mechanism will align with other UK climate policies.
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