The UK CBAM Starts in 2027: How It Differs from the EU's

The EU’s Carbon Border Adjustment Mechanism will not remain the only one of its kind: the United Kingdom launches its own CBAM on 1 January 2027. If you export steel, aluminium, cement, fertilisers or hydrogen to the UK, from 2027 you will be managing data for two separate border mechanisms — and they are not the same thing.

All design details in this article are taken from the UK government’s official response to the policy design consultation; the source is linked at the end.

The biggest difference: a tax, not certificates

Under the EU CBAM the importer buys and surrenders certificates. The UK CBAM is designed as a levy: the importer pays the product’s embodied emissions (tCO₂e) multiplied by the applicable sector rate. No certificates to buy, hold or surrender.

Rates will be set quarterly, reflecting the UK ETS price and the carbon price support, with a separate rate per sector adjusted for free allowance levels. So “the UK CBAM price” will not be a single number but a table of sector rates.

Scope: similar but not identical

Covered sectors: aluminium, cement, fertilisers, hydrogen and iron & steel. Two notable departures:

• Electricity is out of scope — the EU CBAM covers it, the UK does not.
• Glass and ceramics, considered initially, were not brought into the 2027 scope; future inclusion will be considered.

The threshold: £50,000, not 50 tonnes

Against the EU’s mass-based 50-tonne exemption, the UK chose a value-based threshold: importers below £50,000 of UK CBAM goods over a rolling 12-month period fall outside registration. Per the government’s impact assessment, this removes about 80% of otherwise registrable businesses while keeping over 99% of emissions within scope.

The data side: actual emissions or default values

Here the logic resembles the EU’s: the importer either uses the product’s actual embodied emissions or relies on default values. UK defaults will be set per product as a global average emissions intensity weighted by key trading partners’ production volumes — a different construction from the EU’s country-based tables.

For producers this means: the installation data structure you build for the EU serves the UK too. The same monitoring period, the same process data — reported in two different formats to two regimes.

A carbon price paid at origin counts here too

The UK design provides relief where goods faced an explicit carbon price overseas — defined as a price per tonne of CO₂e placed directly on greenhouse gas emissions produced during a given process, applied on a quarterly basis. The UK version of the EU’s “effectively paid” debate will be worth tracking towards 2027.

Timeline and liable party

• 1 January 2027: the UK CBAM starts. First accounting period: 12 months (all of 2027).
• 31 May 2028: first return due.
• From 2028: transition to quarterly periods.
• Liable person: the person responsible for the goods when they are released into free circulation.

The two regimes side by side

	EU CBAM	UK CBAM
Mechanism	Certificate purchase + surrender	Levy
Start	1 January 2026 (definitive period)	1 January 2027
Sectors	Cement, iron & steel, aluminium, fertilisers, hydrogen, electricity	Same, minus electricity
Exemption threshold	50 tonnes/year (mass)	£50,000/12 months (value)
Price	EU ETS auction average; weekly from 2027	Quarterly sector rates (UK ETS-based)
Default values	Per country × CN code	Per product, global weighted average
First declaration	30 September 2027 (2026 imports)	31 May 2028 (2027 imports)

Source: UK Government, “Introduction of a UK Carbon Border Adjustment Mechanism from January 2027 — Government response to the policy design consultation”. Implementing legislation is still taking shape; work from current official publications when preparing declarations.