UK and EU Carbon Border Adjustment Mechanism development

The United Kingdom and the European Union are advancing frameworks for their respective Carbon Border Adjustment Mechanisms (CBAM) to mitigate carbon leakage.

The UK government has introduced indicative calculation metrics for its CBAM, which is scheduled for implementation in 2027. This system will utilize a simplified methodology based on sector or global averages to mirror costs paid by domestic producers under the UK Emissions Trading Scheme.

In the European Union, the CBAM is entering a definitive phase. Importers of high-emission goods, including cement, iron, steel, aluminum, fertilizers, electricity, and hydrogen, must obtain authorization and purchase certificates. The first annual declarations for 2026 emissions are due by September 30, 2027.

Industry groups, such as EUROMETAL and EUROFER, are actively lobbying for the expansion of these mechanisms. In the EU, the European Parliament has adopted a position to include a wider range of downstream steel and aluminum products to prevent companies from reorganizing supply chains to avoid carbon costs. Industry representatives argue that such extensions are essential to protect European industrial value chains and employment as free emissions allowances under the EU Emissions Trading System are phased out.