UK carbon border tax mechanism will be introduced by 2027

The British government has confirmed it is introducing a UK carbon border tax mechanism, which will come into force by 2027.

The decision followed a consultation, which found British manufacturers overwhelmingly supported a UK carbon border tax mechanism to mitigate carbon leakage which undermines the UKs efforts to cut carbon emissions and can leads to unfair competition for home-based industries that have to meet higher emission standards.

There is concern that the current scenario allows cheaper, carbon-intensive products to flood the domestic market. The planned tax will add a levy to these imports, levelling prices and pushing global manufacturers to decarbonize.

What will the UK carbon border tax mechanism cover?

There will be further industry consultation, during 2024, to determine the tax’s design and delivery, including the precise list of products covered. 

The levy will broadly mirror the EU’s carbon border adjustment mechanism (CBAM) – the world’s first ever carbon tax – which comes into force in 2026 (law transition process is already underway.) UK CBAM will place a carbon price on some of the most emissions intensive industrial goods imported to the UK from the aluminium, cement, ceramics, fertiliser, glass, hydrogen, iron and steel sectors.

Within the EU CBAM, importers of iron, steel, aluminium, fertiliser, hydrogen, electricity, and cement products will be required to purchase CBAM certificates. Importers can then offer sufficient certificates to cover the difference between the EU’s emissions trading scheme (ETS) levies and any carbon prices paid in the country of production.

What does UK manufacturing think of the plans?

While UK manufacturers widely support the planned carbon tax, many industry bodies are concerned changes aren’t happening quickly enough.

Steel UK has warned the UK could become a “dumping ground” for high-carbon imports that previously went to the EU during the year-long lag between the two levies coming into place.

Meanwhile, The British Chambers of Commerce (BCC) has called for alignment between UK and EU Emissions Trading Schemes (ETS), to avoid unnecessary trade and fiscal barriers.

What does this mean for global manufacturing?

For global manufacturers importing into the UK, there is a recommendation to invest in ‘clean tech’ and get ready for these new, enhanced reporting standards.

Investing in Environmental Product Declarations (EPDs), will save manufacturing organisations money and strengthen their position in the UK and EU. It will also help demonstrate the brand’s commitment to sustainability – a top priority for a growing number of consumers and stakeholders.

Carbon taxes are likely to increase as the industry moves forward – and EPDs will become compulsory in many more markets. As global markets increasingly prioritize sustainability, carbon transparency has never been more important. This is particularly true in manufacturing – an industry with one of the highest carbon footprints. Even when the supply chain isn’t perfect, the transparency provided by EPDs removes a significant layer of risk for stakeholders promoting their products.

How can One Click LCA help?

One Click LCA’s EPD Generator enables product and material manufacturers to measure carbon accurately, building transparency across the supply chain to help you to meet the needs of the EU CBAM as well as the future UK mechanism. The One Click LCA Pre-verified EPD Generator is an automated and affordable tool to develop robust Environmental Product Declarations, complying with ISO 14040, ISO 14044, ISO 14067 EN 15804+A1+A2 and ISO 21930/TRACI 2.1, INIES and ISO 14025. With a very streamlined process, One Click LCA Pre-Verified EPD Generator saves you time and money. We provide you with training, set you up on the system and give you the tools you need to conduct your LCA and generate your EPDs automatically.

In summary

A UK carbon border tax mechanism on certain high-emission imports is planned for 2027. It will closely mirror the EU carbon border tax, which applies to imports of iron, steel, aluminium, fertiliser, hydrogen, electricity, and cement products from 2026. As a manufacturer importing into the UK and EU, now is the time to start working towards total transparency across the supply chain. One Click LCA’s EPD services will help manufacturers act quickly, to protect brand and reputation, and create new business opportunities for the future.

Learn more

• Read the European Council’s official press release on the provisional agreement: Circular construction products: Council and Parliament strike provisional deal
• Follow us on LinkedIn to be the first to hear about developments in low-carbon construction