Measure
The government has published its response to the March 2024 consultation. The UK Carbon Border Adjustment Mechanism (CBAM) will be introduced on 1 January 2027. The UK CBAM will place a carbon price on some of the most emissions intensive industrial goods imported into the UK from the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors. The CBAM will not be applied to products from the glass and ceramics sectors from 2027 (as initially envisaged in the consultation). The registration threshold for UK CBAM will be set at £50,000.
CBAM obligations will fall on UK importers of products within aluminium, cement, fertiliser, hydrogen and iron and steel sectors.
There are likely to be wider commercial implications across supply chains involving CBAM goods.
UK CBAM will be introduced on 1 January 2027.
The introduction of the UK CBAM will place additional compliance on businesses importing CBAM goods into the UK. The CBAM advances decarbonisation efforts by putting a carbon price on imports into the UK, addressing the risk of ‘carbon leakage’ (the offshoring of emissions-intensive activity). Businesses will need to consider the commercial implications of these additional costs in their supply chains.
The UK’s approach appears to take learnings from the EU CBAM, such as the initial use of default values for embedded emissions and applying a registration threshold that is expected to be of particular benefit to small and medium sized enterprises. Businesses with UK/EU cross-border supply chains will need to consider the impact of both measures.