What is CBAM?
The Carbon Border Adjustment Mechanism, known as CBAM, is a carbon pricing policy applied to the import of specific goods produced in countries where carbon regulations are less stringent than in the UK or EU.
Its purpose is to ensure that imported goods carry an equivalent carbon cost to goods produced domestically, preventing what is known as ‘carbon leakage’, which is the practice of shifting carbon-intensive production to countries with fewer emissions regulations, undermining the decarbonisation efforts of those with stronger environmental frameworks.
There are two distinct mechanisms that UK businesses need to be aware of:
- UK CBAM — Applies to goods imported into Great Britain. Comes into force on 1 January 2027. The minimum registration threshold is £50,000 of relevant goods imported over a 12-month rolling period.
- EU CBAM — Applies to goods imported into EU member states. Entered its definitive phase on 1 January 2026. The first annual declaration covering 2026 imports is due by 30 September 2027.
Who Needs to Comply?
CBAM obligations fall on different parties depending on whether you are importing into the UK, importing into the EU, or exporting CBAM goods to EU customers.
UK importers of CBAM goods
If your business imports goods from any of the covered sectors into Great Britain and your total import value for those goods exceeds £50,000 over a 12-month rolling period, you will be required to register with HMRC and comply with the UK CBAM from 1 January 2027.
Businesses exporting to EU customers
If your UK business exports iron and steel, aluminium, cement, fertilisers or hydrogen to EU buyers, you are already directly affected by the EU CBAM. From 1 January 2026, EU importers purchasing these goods are required to purchase CBAM certificates to cover the embedded emissions. They will need verified emissions data from you in order to calculate their obligations accurately.
Businesses with supply chains involving CBAM materials
Even if your final product is not itself a CBAM good, you may be affected if your manufacturing processes or supply chain involve the import of covered materials such as steel or aluminium. As CBAM scope expands, the reach of these obligations will extend further into downstream production.
Why Does CBAM Compliance Matter?
- Financial liability: The CBAM charge is calculated against the UK ETS carbon price. For businesses with substantial import volumes, this represents a real and material cost that needs to be understood, planned for, and managed.
- Commercial relationships: For UK exporters supplying EU customers, your ability to provide accurate, independently verified emissions data will increasingly determine whether your goods remain commercially viable in EU markets.
- Regulatory risk: Non-compliance with CBAM requirements can result in penalties. As with all HMRC-administered taxes, record-keeping and timely submissions are essential.
- Supply chain visibility: CBAM requires a level of carbon data transparency that many supply chains are not yet set up to provide. Building that visibility now positions your business for a regulatory environment that is only going to become more demanding.
How Can ECA Help?
ECA has been helping businesses navigate complex energy and environmental regulations for decades.
Whether you’re a large importer assessing a significant CBAM liability, or a smaller organisation trying to understand whether CBAM applies to you at all, our team can give you a clear picture and a practical path forward.
- Scoping and exposure assessment: We will work with you to identify which of your imports fall within CBAM scope, assess your likely liability based on current import volumes and carbon prices, and determine whether you meet the registration threshold.
- Emissions data gathering and verification support: We help you establish the processes needed to collect, record and verify this data in line with CBAM requirements.
- Registration and reporting support: We guide you through the registration process with the relevant authority and help ensure that your returns are accurate, timely and fully compliant.
- Ongoing monitoring and compliance management: Our team provides ongoing support to help you stay ahead of changes, update your processes as required, and manage your CBAM obligations year on year.
- Integration with wider carbon and energy strategy: As a comprehensive business energy consultancy, ECA can ensure your CBAM compliance sits within a coherent, joined-up approach to managing your environmental footprint.