UK Confirms 2027 Rollout for Carbon Border Adjustment Mechanism (CBAM)
The UK government has officially announced the rollout of a Carbon Border Adjustment Mechanism (CBAM) in 2027, following in the footsteps of the European Union’s CBAM.
This mechanism, designed to tackle carbon-intensive imports, will impose a levy on goods with high carbon footprints, including aluminium, cement, fertilisers, iron, steel, and hydrogen.. Although ceramics and glass are excluded initially, this gives more time for adjustments, making room for a thoughtful, phased approach.
CBAM’s main goal is to prevent “carbon leakage” - where production shifts to countries with less stringent carbon regulations. By implementing CBAM, the UK is setting the stage to protect domestic industries that already comply with strict emissions standards, creating a fairer playing field for UK businesses and encouraging cleaner production practices worldwide. Ultimately, CBAM sends a clear message to fossil fuel-dependent countries that the push to decarbonise is not just a local priority, but a global one.
What does this mean if my business exports goods to the UK?
We are working with businesses in Aus, NZ and the US that might not be caught by the local regulation but could be impacted by CBAM so the message is that getting across their carbon accounting, can be strategic even if you're not required to report under your local regulation.
Why carbon accounting is essential for CBAM Compliance
Carbon accounting will be at the heart of CBAM compliance. Under the CBAM framework, companies will need to track and report the carbon emissions embedded in their imported goods accurately. Although, this data isn’t just for show. It directly determines the carbon levy imposed on each product. Accurate emissions tracking can help businesses calculate their CBAM-related costs and avoid potential penalties, making effective carbon accounting practices essential.
For businesses, this means investing in carbon accounting systems and practices to ensure accurate emissions data across their supply chain, with a pathway to product level accounting. By understanding their carbon emissions at every stage, companies will not only comply with CBAM, but also gain insights that could drive more sustainable business practices in the long run.
A push towards a greener, fairer market
The introduction of CBAM represents a new era in global trade, where carbon costs are factored into the equation. This shift pushes high-emission industries to rethink their practices, creating a ripple effect that could encourage global decarbonisation. And for UK businesses, CBAM levels the playing field, ensuring they aren’t disadvantaged by competitors operating under less stringent regulations.
In the end, CBAM is about more than compliance; it’s about aligning global trade with sustainability goals. With robust carbon accounting, companies can meet these new requirements, and also contribute to a greener and fairer market, building resilience in a rapidly changing regulatory landscape.
Looking to get ahead with your carbon reporting? Start by meeting the new standards straight off the bat. We’d be happy to chat over a call or get started with a 30 day free trial here.
