First UK CBAM Draft Legislation Unveiled - What importers need to know

UK CBAM

The UK government has confirmed the introduction of a Carbon Border Adjustment Mechanism (CBAM) starting 1 January 2027, aiming to prevent carbon leakage and support domestic decarbonisation efforts. This mechanism will impose a carbon price on imports of emissions-intensive goods from sectors such as aluminium, cement, fertilisers, hydrogen, and iron and steel. Unlike the EU CBAM, products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027, allowing time to address feasibility concerns raised during consultations. The government plans to keep the sectoral scope under review beyond 2027.

To reduce the administrative burden on smaller businesses, the minimum registration threshold for importers has been set at £50,000 over a 12-month period. Importers will be responsible for reporting both direct and indirect emissions associated with their goods, using either verified data or government-provided default values. The CBAM rate will reflect the carbon price faced by UK producers and will be adjusted quarterly. If a carbon price is applied in the country of origin for imported CBAM goods, UK importers will only need to pay the difference between the UK CBAM carbon price and the carbon price in the place of origin. Only explicit carbon prices, such as emissions trading systems or carbon taxes, will be recognized under UK CBAM.​

Unlike the EU CBAM, which includes a transitional reporting phase, the UK CBAM will impose full compliance obligations from its start date, with no transitional period. To facilitate implementation, the government will establish industry and international working groups, develop detailed guidance, and publish draft legislation for stakeholder review. These steps aim to ensure a smooth transition and compliance with the new carbon pricing framework.

On the 24th April 2025, the UK Government unveiled its first primary draft legislation for the UK Carbon Border Adjustment Mechanism (CBAM) for technical consultation. The technical consultation seeks to ensure that the primary legislation meets the policy intent. It is not a further consultation on the policy design. Any feedback on the legislation should be sent by email by 11:59pm on 3 July 2025.

This policy update is being published to support businesses, international partners and other interested parties in engaging with the technical consultation and to provide an update on decisions taken by ministers following the October 2024 government response to the previous policy consultation on ‘the introduction of a UK carbon border adjustment mechanism’. You can read the previous consultation and government response) on GOV.UK.

Further detailed guidance will be provided in advance of the commencement of CBAM on 1 January 2027.

This information is of interest for:

• UK importers of goods from the aluminium, cement, fertilisers, hydrogen, and iron and steel sectors and downstream producers that use these goods in their supply chains

• Respondents to the previous consultation

• International partners with an interest in CBAM policy

Need help preparing your business to comply with UK and or EU CBAM?

Get in touch as the Chamber is now offering training and consultancy services to support traders. Simply email us at international@gmchamber.co.uk to book a complimentary 20-min session with our team to discuss your business and requirements.