UK weighs aligning its 2027 CBAM with the EU’s

The UK government is considering changes to its carbon border adjustment mechanism, due in January 2027, that would bring it closer to the EU’s CBAM, Eurometal reported on 14 October, citing an official presentation seen by Dow Jones. Uncertain The ideas are at an early stage and no proposal has been published.

What happened

According to the presentation, as reported by Eurometal, options under consideration include:

• Switching to the EU’s product-specific benchmarking to calculate CBAM rates, instead of a single sector rate.
• Country-specific default emission values in place of a global sector average.
• Default values for deducting carbon prices already paid abroad.
• Expanding scope to new products, sectors and indirect emissions.

The UK CBAM will charge importers of steel the gap with the UK ETS price from January 2027. The EU CBAM started its definitive phase on 1 January 2026, with the first certificate surrender due by 30 September 2027.

Why it matters for steel buyers

Under the current UK design, high-carbon steel would pay less in the UK than in the EU, and Eurometal notes the risk that the UK becomes a ‘dumping ground’ for it. Closer alignment would reduce that diversion risk and make a future UK–EU CBAM link, with mutual exemptions, more likely. For EU buyers sourcing from UK mills, or traders moving material across the Channel, that would simplify carbon paperwork. Uncertain Timing is unknown, and any change would likely come after the January 2027 start.

For how CBAM feeds into EU import costs today, see our worked example and the Q3 certificate price.

What to watch

• A formal UK consultation or HM Treasury publication.
• UK–EU ETS linking talks, the precondition for mutual CBAM exemptions.
• The EU’s extension of CBAM to downstream products by 2028.

Sources

• Eurometal: UK considering reforms to its upcoming CBAM framework (14 Oct 2026)
• Loharo: CBAM landed cost worked example
• Loharo: CBAM Q3 2026 certificate price