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The government has released further draft legislation relating to the UK’s Carbon Border Adjustment Mechanism (CBAM), which will affect importers of certain carbon-intensive goods into the UK.
The latest draft provisions address the calculation of embodied emissions, a key component in determining CBAM liability, as well as the monitoring and verification of emissions data. The consultation period runs until 21 May 2026.
Alongside the draft legislation, a policy summary has also been published, offering businesses a helpful overview of how CBAM is expected to operate.
CBAM is scheduled to come into force on 1 January 2027.
Its purpose is to apply a carbon price to specified goods imported into the UK from sectors at risk of “carbon leakage”. This refers to the concern that, as the UK strengthens environmental standards, high-emission production may relocate to countries with less stringent regulations.
In effect, CBAM aims to create a level playing field between UK producers who incur carbon costs and overseas producers who may not.
UK businesses importing aluminium, cement, fertilisers, hydrogen, iron and steel, along with downstream manufacturers using these materials, are likely to be affected.
Primary legislation for CBAM is already in place, having been included in Finance Act 2026. The government is now developing secondary legislation to address the practical administration of the tax.
The first phase of this secondary legislation, covering administrative requirements, CBAM rates and carbon price relief, was consulted on during February and March 2027.
