The government has published further draft legislation on the UK’s Carbon Border Adjustment Mechanism (CBAM). This will have consequences for importers bringing certain carbon-intensive goods into the UK.
The latest draft rules cover calculating embodied emissions, which form part of how CBAM is computed, and the monitoring and verification of emissions data. The consultation runs until 21 May 2026.
Alongside the draft legislation, the government has also published a policy summary. This is a useful document for businesses to refer to for an overview of how CBAM is intended to operate.
CBAM is due to come into force on 1 January 2027.
The aim is to place a carbon price on specified goods imported into the UK from sectors that are at risk of “carbon leakage”. Carbon leakage is the concern that, as the UK tightens its environmental standards, emissions-heavy production simply moves overseas to countries with looser rules.
In effect, CBAM is designed to level the playing field between UK producers who face carbon costs and overseas producers who may not.
UK businesses that import aluminium, cement, fertilisers, hydrogen, iron and steel and downstream producers that use these goods in their supply chains are likely to be affected by the CBAM rules.
The primary legislation for CBAM is already in place, having been included in Finance Act 2026. The government is now producing secondary legislation that will deal with the practical and administrative details of how the tax works day to day.
The first part of this secondary legislation that deals with the administrative requirements, CBAM rate and carbon price relief, was consulted on during February and March 2027.
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