Carbon Border Adjustment Mechanism (CBAM)

What is CBAM?

The Carbon Border Adjustment Mechanism (CBAM) is a carbon pricing framework designed to prevent carbon leakage by ensuring imported carbon‑intensive goods face a comparable carbon cost to domestic production.

CBAM is already live in the EU, and the UK will introduce its own CBAM from 1 January 2027, administered by HMRC. While aligned in intent, UK CBAM operates differently to EU CBAM, creating complexity for organisations importing goods into the UK, the EU, or both.

CBAM is not just a reporting exercise, it is a supply‑chain, data and cost challenge that requires early preparation.

Who Does CBAM Apply To?

CBAM applies to importers of carbon‑intensive goods, with scope determined by commodity (CN) codes at customs, not product descriptions.

In‑scope sectors include:

Cement
Iron and steel
Aluminium
Fertilisers
Hydrogen
Selected finished and semi‑finished products (e.g. screws, bolts), depending on CN code

UK CBAM registration threshold

UK CBAM will apply where the value of in‑scope goods imported into the UK meets or exceeds £50,000, based on:

The expected value of imports over the next 30 days, or
The cumulative value of imports over the preceding 12 months

This threshold is significantly lower than under EU CBAM, meaning far more UK businesses may be affected than expected.

Key Differences: EU CBAM vs UK CBAM

Many organisations will need to comply with both schemes, often for the same goods moving through different markets.

EU CBAM	UK CBAM
Certificate‑based system	Tax‑based system
Certificates purchased and surrendered	CBAM paid via HMRC return
Transitional reporting leading to full compliance	First reporting year: 2027
Electricity included	Electricity excluded initially
De‑minimis based on tonnage	De‑minimis based on value (£50k)

Visit the EU Commission website and UK Government wepbage for more information.

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Our CBAM approach

Scope and Exposure Assessment

Understand whether CBAM applies and where the real risk sits.

We confirm whether your imports fall within CBAM scope by reviewing CN codes, goods, import values and routes to market. This stage identifies where obligations apply across the UK and/or EU, and highlights potential cost and compliance exposure early.

Supply Chain Mapping and Supplier Engagement

Build visibility and secure the data CBAM depends on.

CBAM compliance relies heavily on supplier‑specific emissions data. We map international supply chains, identify production sites and suppliers, and support engagement to collect the energy and emissions data required for CBAM reporting.

Embedded Emissions Calculation and Reporting

Turn data into compliant, defensible CBAM outputs

Using approved CBAM methodologies, we calculate embedded emissions for in‑scope goods and prepare CBAM‑aligned reporting outputs. This includes structuring data in line with UK and EU requirements and ensuring transparency, traceability and audit‑readiness.

Registration, Submission and Ongoing Support

Stay compliant as CBAM evolves

We advise on registration thresholds, submission processes and payment requirements, supporting interaction with HMRC (UK) or the CBAM Registry (EU). As guidance evolves, we provide ongoing support to help you adapt reporting processes, manage risk and plan ahead.

Why partner with McGrady Clarke

As CBAM moves from transitional reporting in the EU to full financial enforcement – and towards UK implementation from 2027 – organisations importing in‑scope goods face increasing cost, data and supply‑chain risk. Preparing early is no longer just about understanding the legislation; it is about building the systems, supplier engagement and commercial insight needed to avoid default values, penalties and disruption.

McGrady Clarke supports clients beyond compliance. Our specialists combine carbon accounting expertise, supply‑chain analysis and regulatory insight to deliver CBAM solutions that are accurate, defensible and commercially informed. We help organisations understand their exposure, secure reliable supplier data and manage CBAM as part of a wider decarbonisation and procurement strategy, not as a last‑minute reporting exercise.

Contact our team today