Carbon border adjustment mechanism in focus

HMRC and the Treasury are consulting on proposals for the design and administration of the UK carbon border adjustment mechanism (CBAM) from 1 January 2027. It will apply to imports of some carbon intensive imported goods from the following sectors: aluminium; cement; ceramics; fertilisers; glass; hydrogen; and iron and steel.

The government invites views from interested parties including importers and their agents other businesses individuals tax advisers trade and professional bodies and other interested parties including those overseas.

The purpose of a CBAM is to mitigate the risk of carbon leakage by applying a carbon price to imported goods to ensure they are subject to a comparable carbon price to that incurred by UK-based production. Since any such mechanism will involve administrative burdens for business the government states that a CBAM will only be introduced where the evidence of carbon leakage risk...