The government has published its response to the ‘Introduction of a UK carbon border adjustment mechanism from January 2027’ consultation confirming that products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027.
The consultation ran for 12 weeks and received over 340 responses from various domestic and international stakeholders, including UK and overseas industry, trade associations, importers, think tanks and academics.
The consultation set out proposals for the design and administration of the UK carbon border adjustment mechanism (CBAM).
The Government response confirms that:
- A UK CBAM will be introduced on 1 January 2027. It will place a carbon price on goods that are at risk of carbon leakage imported to the UK from the aluminium, cement, fertiliser, hydrogen, iron and steel sectors. It will ensure that UK decarbonisation efforts lead to a true reduction in global emissions rather than simply displacing carbon emissions overseas.
- Products from the glass and ceramics sectors will not be in scope of the UK CBAM from 2027, as previously proposed, to allow government and industry time to address feasibility concerns raised throughout the consultation process. The government will continue to work with industry to address these concerns before considering their potential inclusion at a later date.
- The value of the minimum registration threshold will be increased from £10,000 to £50,000 so only businesses importing £50,000 or more of CBAM goods over a 12-month period will need to comply with the UK CBAM.
Explainer: What is carbon leakage, and what will the CBAM achieve?
The UK aims to reach net zero emissions by 2050, focusing on clean energy and decarbonising industry to cut emissions by two-thirds by 2035. This transition is expected to create jobs, strengthen energy security, and support sustainable economic growth.
However, there’s a risk of carbon leakage, where companies may move production to countries with lower carbon costs, undermining global emission reduction efforts. Currently, only 24% of global emissions are covered by carbon pricing, with most systems having lower prices than the UK’s.
While international solutions to carbon leakage are ideal, global alignment on carbon pricing will take time. The UK has relied on free allocation under its Emissions Trading Scheme (ETS) to address carbon leakage, but this will reduce over time.
To mitigate additional carbon leakage risks as decarbonisation efforts accelerate, the UK CBAM will ensure that carbon-intensive imports face similar carbon costs as UK-made goods, levelling the playing field and reducing leakage risks.
In September 2024, the UK ETS Authority also consulted on moving the start of the second free allocation period from 2026 to 2027 and extending the current allocation period to include 2026. A move to 2027 would enable the government to align the implementation of the Free Allocation Review with the introduction of the UK CBAM, ensuring a holistic policy approach to carbon leakage. The UK ETS Authority will make a final decision and respond to the consultation in due course.