- The government has confirmed its plans to introduce the UK CBAM from 1 January 2027, to target imports of carbon intensive products such as iron, steel, aluminium, fertiliser, hydrogen, and cement. The UK CBAM will represent the gap between any carbon price applied in the country of origin and the carbon price faced by UK producers. Ceramics and glass will not be part of the products in scope initially. There will be five rates of UK CBAM for each product type. Importers will need to register for UK CBAM, with the registration threshold set at £50,000 per rolling 12-months period.
- On 28 November 2024, two new consultations were issued on expanding the UK ETS to include the maritime sector from 2026 and on non-pipeline transportation for carbon capture and storage. On the same day, an initial response to the UK ETS authority’s 2023 free allocation review was published, confirming changes to free allocation rules to ensure participants who permanently cease their operations do not receive excess free allocation in their final year. On the former, the Department for Transport released on 25 March 2025 a new maritime decarbonisation strategy, aiming to cut greenhouse gas emissions to zero by 2050 with additional interim targets in 2030 (30%) and 2040 (80%). This includes the announcement of investment in green technologies and fuels and the inclusion of local shipping sector under the UK ETS from 2026. Two new calls for evidence were released on net zero ports and the decarbonisation of smaller vessels.
- On 30 January 2025, a policy paper was published by the Department for Energy Security and Net Zero, in response to an earlier consultation on certain technical and operational changes (including the publication of a registry transaction data, additional exception to disclosure of UK information and extension of ultra small emitters status) to the UK ETS, which came into force on 31 March 2025.
- On 11 February 2025, HM Treasury released the Terms of Reference for the newly created UK CBAM international group which will be used to communicate UK CBAM policy updates and receive feedback on specific UK CBAM policy design from international stakeholders.
- As part of the UK Labour government “EU reset”, proposals for linking the EU and UK ETS are being considered. News on this could emerge later in the Spring at the EU-UK summit.
- Timing: The policy design of the new UK CBAM may be subject to future consultation, stakeholder views or industry roundtable. The new calls for evidence related to the maritime decarbonisation strategy are due on 24 June (net zero ports) and 25 July (smaller vessels).
Resources (click to open)
- Call for evidence: Decarbonising smaller vessels (Department for Transport, March 2025)
- Call for evidence: Net zero ports - challenges and opportunities (Department for Transport, March 2025)
- Maritime Decarbonisation Strategy (Department for Transport, March 2025)
- Technical and operational amendments to the UK Emissions Trading Scheme: UK ETS Authority consultation response (Department for Energy Security and Net Zero, January 2025)
- Expanding and strengthening the UK Emissions Trading Scheme (Department for Energy Security and Net Zero, press release, November 2024)
- UK CBAM: a new tax on carbon-intensive imports | TaxScape | Deloitte (April 2024)
- Consultation on the introduction of a UK carbon border adjustment mechanism (HM Treasury and HMRC, March 2024)
- Factsheet: UK Carbon Border Adjustment Mechanism (Department for Energy Security and Net Zero, HM Treasury, consultation outcome, December 2023)
- Industry invited to share views on changes to Emissions Trading Scheme (Department for Energy Security and Net Zero, press release, December 2023)
