What is a CBAM?
A carbon border adjustment mechanism (CBAM) applies a price to the embedded carbon emissions generated by specific high-carbon goods imported into a domestic market. The primary goal is to prevent “carbon leakage” where emission-intensive production shifts to countries with more relaxed climate policies, by aligning carbon costs for imports with those produced domestically.
The aim is to support the competitiveness of domestic industries required to pay to emit carbon through Emissions Trading Scheme (ETS), whilst encouraging international suppliers to decarbonise. CBAM mandates that importers measure, report, and pay the costs of emissions for covered goods, ensuring imported goods reflect their carbon cost.
EU CBAM
UK CBAM
Latest
On 1 January 2026, the EU CBAM shifted from the transitional phase which required reporting only, to full implementation.
Introduced in the Finance Bill 2024–25, the primary CBAM legislation is currently making its way through Parliament.
Scope
In scope: Aluminium, including cans and containers for compressed or liquefied gas.
Out of scope: Can ends and scrap.
See Annex 1 of Regulation (EU) 2023/956 here.
In scope: Direct emissions only. Aluminium, including cans and containers for compressed or liquefied gas.
Out of scope: Can ends and scrap.
See Annex B of Introduction of a UK CBAM here.
Obligations
Applies to EU importers. They must:
Register and submit annual declarations including quantities of aluminium they import / verified GHG emissions produced during production / the carbon price in country of origin.
Purchase and surrender CBAM certificates to cover embedded emissions.
Applies to either the person responsible for completing the customs declaration or the person on whose behalf the goods are moved into the UK if there are no customs controls. They must:
Register with HMRC, report data and pay an online tax return following the end of each accounting period.
Threshold
EU companies importing less than 50 tonnes of CBAM goods per year are exempt from CBAM obligations.
You must register for CBAM if the value of your imports exceeds £50,000 over the previous 12 months or is expected to do so within the next 30 days.
Pricing
Based on EU ETS prices. For importers unable to provide specific verifiable data, default values will be applied with a markup compared to using actual data. If the carbon price was paid in the UK via ETS, this can generally be offset against the EU CBAM liability.
A fixed levy. The carbon cost placed on aluminium will be set as a fixed monetary charge per tonne of embedded emissions. If importers are unable to provide specific verifiable data, default values will be applied with a markup compared to using actual data. If the carbon price was paid in the EU via ETS, this will generally be offset against the UK CBAM liability.
Role of UK businesses
EU-based importer may seek the above information from UK exporters.
Exporters can provide details directly to the Commission via an operators portal.
Stringent enforcement measures including criminal penalties for noncompliance will apply.
Key dates
1 January 2026: Definitive phase begins with financial obligations applying to 2026 emissions.
31 March 2026: Deadline for importers to register.
31 May 2027: First annual declaration and certificate surrender due on 2026 imports.
2028 onwards: Commission proposals include an expanded scope for specific downstream goods and can ends, as well as the inclusion of pre-consumer scrap.
1 January 2027: UK CBAM enters into force (no transition period). Reporting obligations begin with the first accounting period being the 2027 calendar year.
1 January 2028: Accounting periods will shift to quarterly with payments due two months later.
31 May 2028: UK CBAM return and first payment due for 2027 imports and Q1 2028.
Onwards: Review of CBAM including potential for alignment with EU ETS and CBAM / Review of scope / inclusion of indirect emissions.
Actions for UK-based companies
- Sign up to the UK CBAM mailing list for updates. Email: cbampolicyteam@hmrc.gov.uk
- Supply chain audit: Identify aluminium goods by commodity code in scope of CBAM and verify whether imports meet the threshold.
- Data collection: Engage with EU and non-EU supply chain. You may need to share verified emissions data with EU importers or survey suppliers to understand their emissions visibility.
- Evaluate your supply chain to assess where emissions reductions may be possible to lower future CBAM costs.
- Forecast costs to understand potential impacts of the new obligations
- Speak to a compliance scheme: This fact sheet is to aid member’s understanding; however, it does not constitute legal advice. We advise speaking to experts in compliance if you are unsure of your legal requirements.
