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Views sought on proposals for the design and administration of the UK carbon border adjustment mechanism from 1 January 2027.

HM Treasury and HMRC are seeking views on proposals for the design and administration of the mechanism of a carbon border adjustment mechanism (CBAM) on imports into the United Kingdom of certain carbon intensive goods from January 2027.

The UK has committed to ambitious targets to reduce its emissions by at least 68 per cent by 2030 and to net zero by 2050. Progress with decarbonisation plans could undermined by carbon leakage. Businesses must be able to invest in the UK with confidence that their efforts will lead to true decarbonisation globally, not the offshoring of emissions. The government wants to ensure that there are strong incentives for economies and industries to decarbonise in a race to the top, and not allow a loophole for emissions to be displaced rather than reduced. 

The UK CBAM will place a carbon price on some of the most emissions intensive industrial goods imported to the UK from the aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron and steel sectors that are at risk of carbon leakage, ensuring that a carbon price is paid regardless of where the goods are produced. 

The consultation seeks views covering the following aspects:

• What the CBAM will apply to – including sectoral and product scope, and exemptions.
• How the CBAM liability will be calculated – including principles for the calculation of embodied emissions and the price payable with any adjustments for overseas carbon pricing.
• How the CBAM will operate – including administration, payment and compliance.

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First published 22 March 2024