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The government has released its response to the consultation on implementing a UK carbon border adjustment mechanism (CBAM) as part of the Autumn Budget 2024. This response reaffirms its commitment to launching the UK CBAM on 1 January 2027 and addresses stakeholders' concerns about compliance obligations.

Key highlights of the government response include the increase of the proposed minimum registration threshold from £10,000 to £50,000 of CBAM applicable goods over a 12-month period and the temporary exclusion of products from the glass and ceramics sectors to allow government and industry time to address issues raised during the consultation process. Sectors impacted by CBAM from 1 January 2027 include those that import aluminium, cement, fertiliser, hydrogen, iron and steel.

Given the significant similarities with the EU CBAM, stakeholders may be able to draw insights from their EU counterparts. However, the unique nature of this tax, coupled with its reliance on data from various manufacturers throughout a diverse supply chain, underscores the importance for CBAM product importers to ensure that foreign suppliers and manufacturers understand and agree on the required information. It will also be key to establish how it will be collected, verified, and reported at each level of the supply chain.

Businesses must therefore assess their carbon position and determine how they will collect the relevant information required for compliance in preparation for implementation in 2027. Our next article will a take deeper look at what the CBAM entails, similarities and lessons from the EU CBAM, and next steps.