26 March 2024

Government seeking views on introduction of UK CBAM

HMRC & HMT have launched a consultation seeking views on the proposed UK carbon border adjustment mechanism.


The UK government announced that it would introduce a carbon border adjustment mechanism (CBAM) on imports into the UK of certain carbon intensive goods from January 2027. His Majesty’s Revenue & Customs (HMRC) and His Majesty’s Treasury (HMT) have today (21 March) published a consultation seeking views on proposals for the design and administration of the mechanism. 

The UK CBAM will place a carbon price on goods imported to the UK from the aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron & steel sectors. 

The consultation sets out how the government is planning to design the UK CBAM so that highly traded, carbon intensive goods from overseas face a comparable carbon price to those produced in the UK. It seeks views on the proposals set out across three main areas: 

  • Applying the UK CBAM – the sectoral and product scope 
  • Calculating the UK CBAM liability – how the liability for the UK CBAM will be calculated, including emissions reporting, default values, the UK’s carbon price and adjustments for carbon prices applicable overseas 
  • Administration, payment and compliance of the UK CBAM 

Questions include:

  • Do you agree with the proposed list of CBAM goods to be included? 
  • Do you agree that the government’s definitions of ‘direct’ and ‘indirect’ emissions accurately describe the embodied emissions a CBAM ought to place a carbon price on, in line with those emissions within scope of the UK Emissions Trading Scheme (ETS)?
  • Do you agree that scrap aluminium, scrap glass and scrap iron & steel do not pose a carbon leakage risk and should not be within scope of the CBAM?
  • Do you foresee any difficulties with the government’s proposal to use product level default emissions values calculated in line with global average emissions weighted by the production volumes of the UK’s key trading partners?
  • Do you foresee any difficulties in obtaining an accurate weight for CBAM imported goods?
  • Does setting a CBAM rate for each sector on a quarterly basis strike the right balance between tracking the UK ETS market price and giving importers certainty for financial planning?
  • Do you consider that HMRC's approach to enforcement powers and penalties is appropriate?

IOM3 will be engaging with members to develop a response to this consultation. To express an interest in being involved or to share your views, please contact [email protected] 

View the consultation