Both mechanisms target carbon leakage: the movement of production and emissions to countries with weaker climate rules. UK and EU producers pay for emissions through emissions trading schemes, while most overseas competitors do not. UK Steel calculates that 91.8% of global steel production faces no carbon cost comparable to the UK.
Gareth Stace, Director General at UK Steel, put the industry position plainly: "The UK CBAM must be designed to be robust and impenetrable." He warned that a weak border would let high-emission steel displaced from the EU flood the UK market, undercutting producers just as they invest in electric arc furnace production.
The two schemes answer the same question with different instruments. The table below summarises the differences that drive cost and workload, drawn from HM Treasury's CBAM factsheet and the European Commission's CBAM rules.
| Feature | EU CBAM | UK CBAM |
| Financial obligation begins | January 1, 2026, after a reporting-only phase from October 2023. | January 1, 2027, with no transitional reporting phase. |
| Instrument | Certificates surrendered by importers. | A tax administered by HMRC, paid through returns. |
| Cost basis | Certificate prices track quarterly EU ETS auction averages (weekly from 2027). | Rate set by government per sector, reflecting the UK ETS net of free allowances. |
| Sectors | Cement, iron and steel, aluminium, fertilisers, hydrogen, and electricity. | Aluminium, cement, fertiliser, hydrogen, and iron and steel; no electricity. Glass and ceramics are not included in the UK CBAM scope taking effect in 2027. |
| Exemption threshold | 50 tonnes net mass per importer per year. Hydrogen and electricity excluded from the 50-tonne exemption, not excluded from CBAM. | £50,000 of CBAM goods over preceding 12 months, or expected in the next 30 days. |
| Emissions in scope | Direct and, for some products like cement, indirect. | Direct only; indirect emissions delayed until 2029 at the earliest. |
| First payments | Certificate sales open in February 2027, covering 2026 imports. | First return covers all of 2027, payable by the end of May 2028. |
Your EU customers hold the legal obligation, but they discharge it with your data. Since January 2026, EU importers above the applicable threshold need to purchase certificates for covered EU CBAM goods (certificate sales begin in 2027, covering 2026 imports). Their declarations can use verified actual emissions or Commission default values. Where verified actual data is unavailable, the importer can use Commission default values. An efficient overseas producer may lose the commercial benefit of its lower emissions if it cannot provide verified data. Manufacturers who prepare early can differentiate their products by demonstrating lower verified emissions, reducing the risk of higher CBAM costs for their clients.
The scope is still growing. In June 2026, the Council proposed adding almost 400 downstream products, including machinery, fabricated metal goods and vehicle components, from January 1, 2028. This proposal also strengthens anti-circumvention rules. The European Parliament is expected to vote on its position in September 2026.
From January 2027, liability for the tax sits with the importer. Registration is triggered when a business imports at least £50,000 of CBAM goods over the applicable preceding period, or expects to import at least £50,000 over the next 30 days. Each return uses either a single government default value per product or independently verified actual emissions data. As in the EU, verified data rewards cleaner producers. On July 13, 2026, HMRC published version 1.00 of the System Boundaries Document. The document defines the production processes and direct emissions that count for each CBAM good and how actual emissions are monitored and verified. The detailed Emissions and Verification Regulations and associated force of law notice had previously been published in draft and were still awaiting finalisation at the time of writing this article.
The System Boundaries Document defines what counts for each CBAM good under actual and default calculations. It includes direct emissions from the production processes specified for each product category, together with relevant precursor emissions. Infrastructure and equipment are excluded across the system. Cutting, welding and finishing are also excluded for aluminium and iron or steel products. The UK methodology uses several concepts also found in EU CBAM, including installation-level emissions, precursor goods and independent verification. Businesses should still check their data against the UK system boundaries and verification rules because the two regimes are not interchangeable. Importers must obtain the data from installation operators.
Dr Diana Casey, the Mineral Products Association's Executive Director for Energy and Climate Change at the time, warned about the timing mismatch: "A failure to align with EU CBAM 2026 timing will potentially expose the UK industry to a surge in imports." MPA analysis shows imports already supply 30% of the UK cement market. Until January 2027, material that would face certificate costs at the EU border enters the UK without a UK CBAM charge.
CBAM costs reach your projects through the supply chain, not through your own compliance obligations. Four exposures require attention now:
Material budgets: Importers may pass some of their CBAM costs through to steel, cement, concrete, and aluminium prices from 2027.
Procurement criteria: Suppliers with independently verified emissions data can evidence lower CBAM liability than defaults imply, making carbon data a commercial differentiator.
Early design decisions: Specifications set in 2026 will be built under 2027 cost conditions. Early whole life carbon assessments show where CBAM-exposed materials concentrate and allow reductions or substitutions.
Dual-market projects: Portfolios spanning the UK and EU face two rulebooks, two thresholds, and two sets of documentation for the same product.
At the UK-EU Summit on May 19, 2025, both governments agreed to work towards linking their emissions trading schemes. Linked schemes would create the conditions for mutual CBAM exemptions. No agreement is yet ratified, so the safe planning assumption for 2026 and 2027 remains dual compliance: two regimes, one supply chain, and data that satisfies both.
For all their differences, both regimes depend on the same input: verified, product-level embodied carbon data. An Environmental Product Declaration (EPD) or product carbon footprint does not satisfy CBAM reporting requirements on its own, but underlying production and emissions data may be reusable. These must be recalculated and verified according to the applicable UK or EU CBAM methodology. Manufacturers can build the data foundation with One Click LCA's EPD Generator and Product Carbon Footprint tools. AEC teams can compare the carbon performance of CBAM-exposed materials with Materials Compass before those choices reach procurement.
The EU CBAM is a certificate scheme priced off the EU ETS, live since January 2026. The UK CBAM is a tax starting January 2027, with government-set sectoral rates, a £50,000 registration threshold, and no electricity sector. Both regimes reward verified emissions data over default values, which manufacturers can produce with One Click LCA.
The UK CBAM starts on January 1, 2027 with no transitional reporting phase. The first accounting period covers all of 2027, with payment due by the end of May 2028. Manufacturers and importers can prepare their product emissions data in advance using One Click LCA's EPD and carbon footprint tools.
No, the EU importer pays, but UK exporters can supply verified embedded emissions data. If they do not, their EU customers can use Commission default values, which may result in a higher calculated liability. A UK carbon price already paid can be deducted. One Click LCA helps exporters produce the verified product-level data EU buyers now request.
Not on its own. An Environmental Product Declaration follows different calculation rules than CBAM reporting requires. However, the life cycle inventory behind an EPD supplies most of the input data, so manufacturers using One Click LCA can extend existing EPD work towards CBAM-ready emissions reporting.