UK CBAM announcement at Autumn Budget 2024

The UK Government has released its response to the consultation on introducing a Carbon Border Adjustment Mechanism (CBAM), announced in conjunction with the Autumn Budget 2024. This update follows earlier discussions led by CBAM representatives this year and addresses carbon leakage concerns by setting a carbon price on specific imports.

Key Points from the Government Response:

1. Introduction Date: The UK CBAM will be implemented from 1 January 2027. It will apply a carbon charge to goods imported into the UK that are considered at risk of carbon leakage, ensuring that UK decarbonisation efforts genuinely contribute to reducing global emissions.
2. Covered Sectors: Initially, the UK CBAM will apply to the aluminium, cement, fertiliser, hydrogen, iron, and steel sectors. Imports within these industries will incur charges based on their carbon emissions, aiming to support a level playing field with UK-based manufacturers.
3. Exclusions for Glass and Ceramics: For now, the glass and ceramics sectors will not be subject to the CBAM starting in 2027. This change follows feasibility concerns raised during the consultation. The government will continue working with these industries to address these issues and may consider their inclusion at a later stage.
4. Threshold Change: The minimum registration threshold for CBAM compliance has been increased from £10,000 to £50,000. Only businesses importing £50,000 or more of CBAM-covered goods annually will need to comply, reducing the regulatory impact on smaller importers.
5. Application Across the UK: The UK CBAM will apply to imports throughout the UK. For Northern Ireland, any alignment with new EU CBAM regulations under the Windsor Framework would need to be approved by the UK Government at the Withdrawal Agreement Joint Committee.

Implications for Northern Ireland Manufacturers:

Manufacturers in Northern Ireland will need to monitor the CBAM’s progress and assess its impact on imports from the specified sectors. The increased registration threshold may reduce compliance obligations for smaller businesses, while the glass and ceramics exemption could ease requirements for manufacturers in those industries.

Further information on next steps and specific guidance is available in the full Government Response, which manufacturers may want to review to understand the CBAM’s requirements before the 2027 implementation.