Carbon Border Adjustment Mechanism: July 2026 Delivery Update

The Government are introducing a carbon border adjustment mechanism from 1 January 2027 which will ensure that highly traded, carbon-intensive goods which are imported into the UK face a comparable carbon price to what is paid by manufacturers producing the same goods in the UK.

Following Royal Assent of the Finance Act 2026, which provides the legislative framework for the UK CBAM, the Government consulted on CBAM secondary legislation in early 2026. After considering the responses to the consultation carefully, the first tranche of secondary legislation has been laid today, setting out the majority of the detailed design and administrative framework for CBAM.

Further secondary legislation, confirming details on how to monitor, report and verify emissions, will follow. Comprehensive guidance will also be published later in the year, which will further assist businesses in complying with CBAM.

The scope of CBAM remains unchanged, with the sectors included being iron and steel, aluminium, fertiliser, hydrogen and cement.

The Government recognise that stakeholders are keen to know more about the UK’s approach to setting default values. The Treasury is carefully considering the methodology for setting these values.

The Government will set out specific values in the autumn; ahead of that, I can reassure interested parties that in line with schedule 17 of Finance Act 2026, the Treasury’s guiding principle in setting default values will be to ensure liable persons do not gain an advantage from using default values over determining the actual embodied emissions of imported CBAM goods.

This means that default values will not be set as a simple global average, but will instead be based on a trade-weighted average. In order to best reflect the imports most likely to rely on default values rather than actual emissions, we will look to exclude data from jurisdictions with robust mandatory MRV systems such as the EU. Where appropriate, we will consider applying additional mark-ups to ensure the environmental integrity of CBAM.

The Government committed previously to consider the feasibility of moving to an alternative approach in future, and will set out more detail on future plans for default values in the autumn, alongside the full list of default values for 2027.

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