The UK government has announced plans to introduce a carbon border adjustment mechanism (CBAM) from 2027, imposing a new tax on imported raw materials such as steel, iron, ceramics, and cement. The levy aims to support domestic producers and reduce carbon leakage, where UK manufacturers are undercut by foreign rivals with lower carbon costs.
Chancellor Jeremy Hunt stated that the levy would ensure carbon-intensive products from overseas face a comparable carbon price to those produced in the UK, giving domestic industry confidence to invest in decarbonisation. The charge will depend on emissions in the manufacturing process and the gap between carbon prices in the country of origin and the UK.
Industry groups have welcomed the plan but criticised the 2027 start date as too late. UK Steel noted that the EU will implement a similar mechanism in 2026, potentially allowing high-carbon steel from countries like China to be dumped on the UK market for a year. Gareth Stace, director general of UK Steel, warned that the delay is hugely concerning despite repeated warnings from the sector.
