Preparing for the Carbon Border Adjustment Mechanism (CBAM)
Learn what CBAM is and how your business can prepare
The Carbon Border Adjustment Mechanism (CBAM) is a regulatory measure to prevent carbon leakage, encourage cleaner production processes and greener global trade practices.
EU CBAM and Northern Ireland
The EU CBAM aims to ensure that goods imported into the EU are subject to a carbon price that mirrors the costs applied to domestic producers. This will require importers of specific carbon-intensive goods to buy certificates equivalent to the carbon price that would have been paid had goods been produced in the EU under carbon pricing rules.
From 1 January 2026, importers must buy CBAM certificates.
Northern Ireland businesses should consider the following EU Carbon Border Adjustment Mechanism implications:
- EU CBAM will likely apply to goods moving from Great Britain to Northern Ireland
- Northern Ireland businesses exporting to the EU/Republic of Ireland will face CBAM requirements
- The UK's own CBAM (planned for 2027) creates additional considerations
The European Union provides a series of online webinars, covering general features of the CBAM as well as the specifics of each sector (iron & steel, aluminium, cement, fertilisers, electricity and hydrogen). Details and recordings of all webinars are available on the .
The European Commission provides additional advice and guidance on the .
UK CBAM
The UK government confirmed on 30 October 2024 that a CBAM will be introduced on 1 January 2027. UK CBAM will place a carbon price on some of the most emissions-intensive industrial goods imported to the UK from the aluminium, cement, fertiliser, hydrogen and iron and steel sectors that are at risk of carbon leakage.
This announcement followed a 12-week policy consultation, which set out proposals for the design and administration of the CBAM. You can , which will:
- shape how the UK CBAM interfaces with the UK ETS and impacts businesses
- determine whether adjustments for the Windsor Framework are incorporated
You can , which provides an overview and explains how it will work.
Consultation
HMRC has launched a technical consultation on draft primary legislation for the carbon border adjustment mechanism. It aims to gather feedback from stakeholders on the drafting of the primary legislation to ensure it delivers the policy correctly and effectively.
The consultation on the legislation will be of interest to importers of goods from the aluminium, cement, fertilisers, hydrogen, and iron and steel sectors, and downstream producers that use these goods in their supply chains.
You can .
What to do now
1. Determine if you're affected
CBAM applies to these sectors:
- cement
- iron/steel
- aluminium
- fertilisers
- hydrogen
- electricity
2. Prepare for EU CBAM now, regardless of final UK position
- Begin (required by August 2025)
- Set up systems to track GB-NI material flows that may be subject to CBAM
- Document carbon prices already paid in your supply chain to claim potential reductions
3. Collect and organise emissions data
- Request actual emissions data from all suppliers for CBAM goods
- Create a formal documentation system tracking your efforts to obtain this information
- Develop a "materials passport" template for your products showing embedded carbon
4. Financial risk management
- Model multiple scenarios for costing (EU CBAM only, EU+UK CBAM, linked ETS)
- Build contingency reserves for potential CBAM costs (5-10% of material value)
- Identify which costs can be passed through your supply chain
5. Supply chain contingency planning
- Map alternative suppliers in the EU, NI and GB with emissions data availability
- Begin conversations with GB suppliers about their CBAM readiness
- Consider strategic stock building of critical CBAM materials before January 2026
Key dates
- August 2025: Deadline for EU CBAM declarant authorisation applications
- October 2025: EU finalises carbon price recognition rules
- 1 January 2026: Full financial implementation of EU CBAM begins
- 1 January 2027: UK CBAM implemented
Businesses should for updates and personalised guidance.
First published 16 May 2025