The Carbon Border Adjustment Mechanism (CBAM) is designed to impose a carbon cost on imported goods to protect domestic industries, prevent carbon leakage, and encourage sustainable practices globally. The EU CBAM entered its transitional phase in October 2023, with full implementation scheduled for January 2026. The UK CBAM, set to launch on January 1, 2027, introduces its own approach without a transitional period. Recent updates to the UK CBAM include raising the registration threshold from £10,000 to £50,000 for CBAM-applicable goods over a rolling 12-month period, aiming to ease compliance for smaller importers.

The EU and UK CBAM share similar goals but diverge significantly in implementation. EU CBAM focuses on sectors like cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity, while UK CBAM excludes electricity but applies direct levies for emissions. In the EU, importers purchase CBAM certificates priced in line with the EU Emissions Trading System (ETS), while the UK applies a levy based on the gap between the UK carbon price and production country costs. Furthermore, the EU initially charges only for direct emissions for some goods, whereas the UK will account for both direct and indirect emissions from the start. These differences emphasize the UK’s distinct regulatory strategy, which prioritizes simplicity but may complicate alignment with global trade standards.

For suppliers, CBAM regulations pose significant challenges, particularly in gathering accurate emissions data throughout their supply chains. At CBAM Reports, we offer comprehensive support to help businesses meet CBAM requirements both in the EU and UK. Contact us to explore how our expertise can simplify your CBAM reporting journey.

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