The government has laid further legislation implementing the Carbon Border Adjustment Mechanism (CBAM), which will affect CEA members importing aluminium, cement, fertiliser, hydrogen, iron or steel. Here's what the update covers, including a corrected scope for ferro-silicon goods.
Earlier this week, the government laid the second tranche of regulations required to implement the Carbon Border Adjustment Mechanism (CBAM), alongside a supporting notice which has force of law.
CBAM is a new tax that will ensure highly traded, carbon-intensive goods imported into the UK face a carbon price comparable to what manufacturers pay for the same goods produced in the UK. In the UK, manufacturers can be subject to carbon pricing for direct emissions under the UK Emissions Trading Scheme (ETS).
It will commence on 1 January 2027 and will apply to imports of specific goods from the aluminium, cement, fertiliser, hydrogen, iron and steel sectors.
This legislation sets out:
You can find the legislation on the government's CBAM collections page, which includes information on:
Additional guidance
HMRC will publish additional guidance later this year to help impacted businesses understand what they need to do to meet their emissions and verification obligations.
Further update
HMRC has flagged that they found a discrepancy between the intended policy position as set out in the policy summary and the legislation, which inadvertently included certain ferro-silicon goods (commodity code 7202 29) within the scope of CBAM. They have stated that they intend to correct this drafting error as soon as possible so that the legislation reflects the policy intention that all ferro-silicon goods are excluded from the scope of CBAM.