The UK government has now published the first illustrative Carbon Border Adjustment Mechanism (CBAM) rates ahead of the scheme’s launch on 1 January 2027. The figures provide the clearest indication yet of the carbon costs that UK importers may face on imported aluminium, cement, fertilisers, hydrogen, and iron and steel products. [gov.uk], [gov.uk]
When Does UK CBAM Go Live?
The UK Carbon Border Adjustment Mechanism will come into effect on 1 January 2027. From this date, UK importers of specified aluminium, cement, fertiliser, hydrogen, iron and steel products will be required to account for the carbon emissions embedded within those goods and pay a CBAM charge where applicable. The mechanism is intended to ensure imported products face a carbon cost broadly comparable to that borne by UK manufacturers, helping to reduce the risk of carbon leakage as UK industry decarbonises. [gov.uk], [gov.uk]
Unlike the EU system, the UK will publish sector-specific CBAM rates on a quarterly basis using a methodology that takes account of UK carbon prices, sector emissions data and the level of free allowances available under the UK Emissions Trading Scheme. The rates published this week are illustrative only, with the first official rates applying from January to March 2027 expected to be published before the end of 2026. [gov.uk]
This publication marks an important milestone for importers, providing the first indication of the likely costs associated with UK CBAM and allowing businesses to begin assessing supply chain impacts, budgeting for future liabilities and preparing the necessary emissions data and reporting processes ahead of implementation. [gov.uk], [gov.uk]
Published Illustrative UK CBAM Rates
- Aluminium: £9.79/tCO₂e [gov.uk], [beckchoice.co.uk]
- Iron & Steel: £9.69/tCO₂e [gov.uk], [beckchoice.co.uk]
- Hydrogen: £9.24/tCO₂e [gov.uk], [beckchoice.co.uk]
- Cement: £8.78/tCO₂e [gov.uk], [beckchoice.co.uk]
- Fertilisers: £1.45/tCO₂e [gov.uk], [beckchoice.co.uk]
These rates are illustrative rather than final, with the first official rates due to be published before the end of 2026 and updated quarterly thereafter. [gov.uk]
How Does the UK Compare with the EU?
While both the UK and EU CBAMs are designed to prevent carbon leakage and create a level playing field for domestic manufacturers, the charging mechanisms differ significantly.
UK CBAM
The UK uses a sector-based methodology that incorporates:
- UK carbon prices
- Sector emissions data
- The proportion of free allowances still provided under the UK ETS
This results in fixed quarterly rates for each sector. [gov.uk]
EU CBAM
The EU system requires importers to purchase and surrender CBAM certificates whose value reflects the prevailing price of allowances under the EU Emissions Trading System (EU ETS). As a result, liabilities fluctuate with the carbon market and are generally much higher than the illustrative UK rates. [gov.uk]
Example: Imported Steel
A steel product with embedded emissions of 2 tonnes CO₂e per tonne of product would attract an indicative UK CBAM charge of:
2 × £9.69 = £19.38 per tonne [gov.uk], [beckchoice.co.uk]
Equivalent EU CBAM costs would depend on the prevailing EU ETS carbon price and any carbon costs already paid in the country of origin, but are generally expected to be considerably higher. [gov.uk]
Why It Matters
The publication of these rates suggests that the UK’s CBAM may initially impose a significantly lower carbon cost on imports than the EU regime. This could have important implications for:
- Import cost forecasting
- Supply chain decisions
- Trade flows between the UK and EU
- Procurement strategies for carbon-intensive goods
At the same time, importers should note that the published figures are only illustrative and may change before implementation. [gov.uk]
Key Takeaway
The UK’s newly published illustrative CBAM rates, ranging from £1.45 to £9.79 per tonne of CO₂e, are substantially lower than the effective carbon costs typically associated with the EU CBAM framework. Businesses importing covered products into the UK should begin assessing potential liabilities now while monitoring for the publication of the first official rates later this year. [gov.uk], [beckchoice.co.uk]
Source: HM Revenue & Customs, Illustrative CBAM rates and worked example for Carbon Border Adjustment Mechanism (CBAM), published 16 October 2026. [gov.uk]