UK Follows Europe With CBAM by 2027

Goods imported into the UK from countries with a lower or no carbon price will have to pay a levy by 2027, ensuring products from overseas face a comparable carbon price to those produced in the UK. 

The carbon border adjustment mechanism (CBAM) will ensure highly traded, carbon intensive products from overseas in the iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass and cement sectors face a comparable carbon price to those produced here.

The new rules will tackle ‘carbon leakage’, reducing the risk of production and associated emissions being displaced to other countries because they have a lower or no carbon price.

Monday's announcement comes as the government publishes its response to a consultation on a range of domestic carbon leakage mitigation measures – which found 85% of respondents said that carbon leakage is a current or future risk to their decarbonisation efforts.

In addition to the government announcing a UK CBAM, stakeholders including power, aviation and industrial sectors have been invited to offer their views on proposed changes to the UK Emissions Trading Scheme, that will ensure it continues to support the UK’s progress to net zero.   A CBAM will work alongside the UK Emissions Trading Scheme to mitigate the risk of carbon leakage.