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UK introduces Carbon Border Adjustment Mechanism

Levy on carbon-heavy goods imports from 2027

The UK is to introduce a levy on certain carbon-heavy goods being imported into the country. The Carbon Border Adjustment Mechanism (CBAM) levy is meant to deter UK businesses buying-up goods from other countries which have loose green environmental restrictions on their own importers. It also helps level-up the playing field for UK businesses which are subject to the Emissions Trading Scheme.

The EU legislated its own EU CBAM as part of the European Green Deal, it takes effect in 2026, with reporting starting in 2023.

The UK’s CBAM will impose carbon taxes on imports of:

  • iron;
  • steel;
  • aluminium;
  • fertiliser;
  • hydrogen;
  • glass;
  • ceramics; and
  • cement.

The design and delivery of the CBAM will be subject to further consultation in 2024, including the precise list of products in scope.

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