Everything UK businesses need to know about the Carbon Border Adjustment Mechanism — before it becomes a costly surprise in January 2027.
Right, let's cut through the policy-speak and talk plainly about UK CBAM. If you import steel sections, aluminium extrusions, fabricated metalwork, or any of the other goods covered by this legislation, you've got roughly 15 months before it costs you real money. And right now, most UK businesses importing these products have either never heard of it or have it on the "I'll deal with it later" pile.
The UK Carbon Border Adjustment Mechanism comes into force on 1 January 2027. It will require importers of certain carbon-intensive goods to declare the embedded carbon in their shipments and pay for certificates to cover it. Get it wrong and HMRC will be less than sympathetic. Get it right and you'll have a compliance edge over competitors who were slower off the mark.
At Epic Sourcing, we've been helping UK businesses source products from China and Vietnam for years. CBAM is now a central part of our conversations with clients importing steel and aluminium products. This guide tells you everything you need to know — no jargon, no waffle — so you can plan ahead rather than scramble.
The UK Carbon Border Adjustment Mechanism (CBAM) is a carbon pricing policy that places a charge on the embedded carbon emissions of certain goods imported into the UK from countries without equivalent carbon pricing. It ensures UK manufacturers — who already pay for their carbon emissions through the UK Emissions Trading Scheme (UK ETS) — are not undercut by imports from countries where production carries no carbon cost.
The honest answer is that most UK importers of steel and aluminium products are not ready for this. We've spoken to dozens of procurement managers over the past 18 months and the pattern is consistent: CBAM is known about in theory but hasn't yet been operationally planned for. That needs to change, because "not ready" in January 2027 means unexpected costs landing on your P&L with no budget to absorb them.
The UK CBAM is modelled on the EU's equivalent, which entered its full implementation phase in January 2026. The EU version has already shown that the administrative burden is real — suppliers need to provide Embedded Carbon declarations, systems need to be set up to track and report, and certificate purchases need to be planned as part of cost modelling. UK importers now have a fixed timeline to do the same work.
The stakes are higher for businesses sourcing from China specifically. China has its own national Emissions Trading System, but carbon prices there are substantially lower than in the UK. The gap between Chinese and UK carbon pricing is what CBAM is designed to close — which means goods manufactured in Chinese steel or aluminium mills will attract CBAM charges when imported into the UK, whereas goods from countries with comparable carbon pricing (such as EU member states) may attract reduced or zero CBAM liability.
For UK businesses currently sourcing structural steel, flat-rolled steel, aluminium profiles, or fabricated metalwork from China — particularly for construction, engineering, or manufacturing supply chains — CBAM could add a meaningful percentage to landed costs. The exact figure depends on the embedded carbon intensity of your specific products and the certified carbon price at the time, but early modelling suggests impacts ranging from 3–12% of product cost for high-carbon steel goods. That's not a rounding error.
Unlike the EU CBAM — which had a transitional reporting phase from October 2023 before full financial obligations kicked in — the UK CBAM as currently structured will require both reporting AND certificate purchases from day one (1 January 2027). There is no transitional warm-up period. If you're unprepared, you could face penalties, delayed clearance, or unexpected costs from the very first shipment of the new year.
The UK CBAM applies to specific sectors that are considered carbon-intensive and where producers face significant international competition. Understanding whether your products fall within scope is the first practical step.
| Sector | Typical UK Imports from China | Carbon Intensity | CBAM Impact Level |
|---|---|---|---|
| Iron & Steel | Structural sections, flat products, tubes, wire | Very High | High |
| Aluminium | Extrusions, sheet, castings, profiles | Very High | High |
| Cement | Portland cement, clinker, construction materials | Very High | High |
| Fertilisers | Nitrogen fertilisers, ammonia-derived products | High | Medium-High |
| Ceramics | Tiles, refractory materials, industrial ceramics | Medium-High | Medium |
| Glass | Flat glass, containers, insulation glass | Medium | Medium |
| Hydrogen | Industrial hydrogen, ammonia precursors | Variable | Variable |
CBAM applies at the commodity code (HS/CN code) level, not just the sector level. This matters because a fabricated steel frame may fall under a different code than raw steel sections, and the two can have different CBAM treatments. The UK Trade Tariff will list the exact codes in scope — and you should check every code you import against the CBAM schedule, not just assume by sector.
Critically, CBAM also covers certain downstream fabricated goods — not just raw materials. If you import welded steel assemblies, machined aluminium parts, or other processed metal goods, these may also be in scope depending on the level of manufacturing carried out at the point of export.
The fastest way to check if your specific products are in scope is to look up your HS codes on the UK Trade Tariff (gov.uk/trade-tariff) and cross-reference against the CBAM sector lists published in the legislation. If you're uncertain, Epic Sourcing can help you run a scope analysis as part of our sourcing service.
Let's walk through the mechanics without the policy fluff. Here's what actually happens when UK CBAM is in full operation from January 2027.
The process starts at your supplier's factory. Under UK CBAM, your overseas supplier (or you, if you're the manufacturer) must provide an Embedded Carbon Declaration — a document stating how much CO₂ (and other greenhouse gases) was emitted per tonne of goods produced. This is calculated using either actual production data from the facility, or the default values published by HMRC where actual data isn't available.
This is where things get operationally complex. Many Chinese steel mills will be able to provide this data — they've been doing it for EU CBAM customers since 2023. But smaller, less export-oriented manufacturers may need guidance, and their data quality will be variable. If verified supplier data isn't available, HMRC will apply default carbon values — which are deliberately set at the high end to incentivise accurate reporting. Defaulting to HMRC's figures will almost always cost you more than getting verified data from your supplier.
As the UK importer, you're the CBAM declarant. When you import in-scope goods through Felixstowe, Southampton, or any other UK port, your customs declaration (submitted via the Customs Declaration Service) will need to include the CBAM declaration. This links to your CBAM account (registered with HMRC) and captures the embedded carbon of the shipment.
Once CBAM is fully implemented, you'll need to purchase UK CBAM certificates equivalent to the declared embedded carbon in your imports. These certificates are priced at the average UK ETS carbon price — which as of late 2026 sits around £40–50 per tonne of CO₂ equivalent. Certificates are purchased through a government-administered registry.
So if you import 100 tonnes of steel with an embedded carbon intensity of 1.8 tCO₂/tonne, you'd owe certificates covering 180 tCO₂ — at £45/tonne, that's an additional £8,100 on that shipment. This is on top of existing import duties.
Certificates are surrendered to HMRC on an annual basis (likely by 31 May for the prior calendar year). You accumulate liability throughout the year and settle it annually. This means cash flow planning is important — the bill for your 2027 imports arrives in mid-2027.
If your supplier already pays for their carbon emissions under an equivalent carbon pricing scheme — for example, if they operate in an EU country covered by the EU ETS — the CBAM charge may be reduced or eliminated to avoid double-charging. This applies to some EU suppliers but NOT to most Chinese manufacturers, whose domestic carbon costs are substantially lower than UK ETS prices.
Let's talk numbers. The cost impact of UK CBAM varies significantly by material, production method, and country of origin. Here's what UK importers of the most commonly sourced materials need to model.
| Steel Product Type | Typical Embedded Carbon (tCO₂/tonne) | CBAM Cost @ £45/tCO₂ | As % of Approx. Steel Price |
|---|---|---|---|
| Basic Oxygen Steel (BOS) — Hot Rolled | 1.8–2.1 | £81–£95 | ~9–11% |
| Electric Arc Furnace (EAF) Steel | 0.4–0.6 | £18–£27 | ~2–3% |
| Structural Sections (I-beams, channels) | 1.6–2.0 | £72–£90 | ~8–10% |
| Welded Steel Assemblies | 1.5–2.5 | £68–£113 | ~6–12% |
| Stainless Steel Flat Products | 3.0–4.5 | £135–£203 | ~4–7% |
Figures are illustrative estimates. Actual HMRC-verified values may differ. Always use certified supplier data where available.
Primary aluminium is one of the most carbon-intensive materials to produce. The smelting process — where alumina is converted to aluminium metal using electrolysis — is enormously energy-hungry. Primary aluminium produced using coal-fired electricity (as is typical in Chinese smelters) has an embedded carbon of 15–20 tCO₂ per tonne of metal — roughly ten times the intensity of EAF steel.
This makes primary aluminium imports from China potentially the most CBAM-affected product category. At £45/tCO₂, the CBAM cost on primary aluminium could be £675–£900 per tonne — compared to a base metal price typically in the range of £2,200–£2,600/tonne. That's a 25–40% addition.
Recycled (secondary) aluminium has a dramatically lower embedded carbon — around 0.5–1.0 tCO₂/tonne — because it doesn't require the energy-intensive smelting step. If you can specify recycled aluminium with your suppliers, the CBAM impact shrinks substantially.
| Aluminium Type | Embedded Carbon (tCO₂/tonne) | CBAM Cost @ £45/tCO₂ | % of Metal Value |
|---|---|---|---|
| Primary Aluminium (Chinese coal-fired grid) | 16–20 | £720–£900/tonne | ~30–40% |
| Primary Aluminium (low-carbon hydropower) | 4–7 | £180–£315/tonne | ~8–14% |
| Secondary / Recycled Aluminium | 0.5–1.0 | £23–£45/tonne | ~1–2% |
CBAM creates a genuine financial incentive to source from lower-carbon producers. A Chinese supplier using hydropower or certified green energy for aluminium smelting can provide documented evidence of lower embedded carbon — meaning your CBAM bill on that shipment is materially lower. Asking your sourcing partner to identify and vet greener suppliers isn't just ESG box-ticking anymore; it's cost management.
Here's where most guides get vague. Let's be specific about the actual preparation steps UK businesses need to take, and the realistic timelines involved.
List every HS/commodity code you import. Cross-reference against the CBAM schedule. Classify each product as in-scope, out-of-scope, or borderline (for legal review). This is the foundation of everything else.
You'll need to register for a UK CBAM account with HMRC. This will likely be through the Government Gateway. Ensure your EORI number is current and linked to your business. You cannot submit CBAM declarations without this registration.
Send a formal communication to every supplier of in-scope goods requesting their embedded carbon data. For suppliers already selling into the EU, ask for their EU CBAM documentation. Give suppliers a deadline of Q1 2027 for verified data.
Recalculate landed costs for all in-scope products using worst-case (HMRC default) carbon intensity figures. This gives you a ceiling for your CBAM liability. Then identify which suppliers can provide certified lower-carbon data, and model the cost reduction.
Your freight forwarder and customs broker need to know CBAM applies to your shipments from January 2027. They'll need to include CBAM declarations in your Customs Declaration Service (CDS) entries. Not all brokers have implemented CBAM processes yet.
If you import in-scope goods without your supplier providing verified embedded carbon data, HMRC will apply default carbon intensity values. These defaults are set at the 90th percentile of global production — deliberately punishing. For primary steel, the HMRC default may be significantly higher than your supplier's actual emission intensity.
Getting certified data from your supplier is not optional if you want to minimise cost. Think of it like VAT — you CAN ignore it, but the penalties and missed reclaims make that a very expensive choice.
At Epic Sourcing, we help UK businesses source from both China and Vietnam — and CBAM is increasingly a factor in which country makes sense for specific products. Here's how the comparison plays out for the materials most affected.
| Factor | China | Vietnam |
|---|---|---|
| Steel Production | World's largest producer; predominantly BOS with coal. High embedded carbon. | Smaller industry; mix of EAF and imported steel for fabrication. Lower intensity in some cases. |
| Aluminium Smelting | Dominant global producer; ~60% coal-fired grid. Very high embedded carbon for primary Al. | Limited primary smelting; mainly fabrication from imported billets. Carbon footprint depends on billet origin. |
| UKVFTA Duty Savings | No preferential trade agreement for most goods. Standard UK Global Tariff applies. | UKVFTA provides 0% duty on qualifying goods. Steel and aluminium products may qualify — check Rules of Origin. |
| Carbon Data Availability | Large mills have EU CBAM data. Smaller manufacturers may need support to provide verified data. | Less EU CBAM experience. UK CBAM data infrastructure less developed — may default to HMRC values initially. |
| CBAM Liability Risk | Higher — especially for primary aluminium and BOS steel | Medium — depends heavily on upstream material sourcing and power grid intensity |
| Sea Freight to UK | ~25–30 days to Felixstowe (Shanghai). ~£900–£1,400/40ft container. | ~28–35 days to Southampton (Ho Chi Minh City). ~£950–£1,500/40ft container. |
The UK-Vietnam Free Trade Agreement (UKVFTA) removes duties on a wide range of goods, but steel and aluminium products have specific Rules of Origin requirements. For steel products to qualify for UKVFTA zero duty, they typically need to have been produced in Vietnam from Vietnamese or UK-origin steel — not simply fabricated from Chinese-origin billets or coils.
However, for fabricated goods (welded assemblies, machined aluminium components, structural metalwork) where Vietnamese labour and processing is the primary value-add, UKVFTA can still deliver significant duty savings.
Standard import duty on many fabricated steel goods from China: 3.5–6%. UKVFTA rate from Vietnam (qualifying goods): 0%. On a £500,000 annual import, that's £17,500–£30,000 saved on duty alone — before even accounting for CBAM. The combined effect of CBAM avoidance on lower-carbon Vietnamese fabrication and UKVFTA zero-duty can make Vietnam sourcing significantly more competitive than it appears on the factory gate price alone.
UK CBAM is administered by HMRC and sits alongside the existing customs import framework. If you're already importing goods into the UK, you're almost certainly already using the systems that CBAM will plug into — but there are specific additions you need to be aware of.
Your Economic Operators Registration and Identification (EORI) number is the cornerstone of UK CBAM compliance. Every UK CBAM declaration will be linked to the importer's EORI number. If you don't have one already (unusual if you're an active importer, but it happens), get one immediately via gov.uk. If you have one but it's linked to an old business entity or address, update it now.
The UK moved fully to the Customs Declaration Service in November 2023, phasing out the older CHIEF system. CBAM declarations will be integrated into CDS entries — either by you, your customs broker, or your freight forwarder acting as your agent. Every CBAM-applicable shipment arriving at Felixstowe, Southampton, London Gateway, or any other UK port will require the carbon data to be declared as part of the import entry.
HMRC is establishing a UK CBAM Registry — an online portal where UK importers will register, track their carbon liability, and purchase and surrender certificates. Registration will be required before any CBAM-applicable imports can be declared. Based on HMRC's published timeline, registration is expected to open in late 2026, giving importers a short window before the January 2027 go-live.
HMRC guidance on UK CBAM is still being finalised as of Q4 2026. Some importers are waiting for the definitive technical notices before taking action. This is a mistake. The core framework is settled — which goods are in scope, the obligation to declare, the requirement to purchase certificates. Start building your compliance infrastructure on what's known now and adjust when the final guidance lands.
Book a free 30-minute call with the Epic Sourcing team. We'll run through your commodity codes, flag what's in scope, and talk through how to get embedded carbon data from your suppliers in China or Vietnam.
Book Your Free CBAM Readiness CallCBAM adds a layer of complexity to international procurement that goes beyond simply finding a good-value supplier. You need suppliers who can provide verified carbon data, produce goods with lower embedded carbon, and work within a framework that keeps your compliance costs manageable. That's exactly where we come in.
At Epic Sourcing, we work with UK businesses importing from China and Vietnam across a range of product categories including steel fabrications, aluminium extrusions, structural metalwork, and industrial components. As CBAM approaches, we're already asking the right questions of our supplier network — about carbon data availability, production methods, and energy sources.
Perfect for businesses importing standard in-scope products where cost minimisation is key. We source from our vetted network of suppliers who can provide carbon data for CBAM compliance, handle quality checks, and manage logistics to your UK door.
Learn more about White Label →For businesses wanting custom-specified products — including specifying lower-carbon production methods or materials to reduce CBAM liability. We work with manufacturers to optimise product specifications against your CBAM cost model.
Learn more about Private Label →Full end-to-end sourcing partnership where we manage your entire supply chain — including CBAM data collection from suppliers, embedded carbon reporting support, and identification of lower-carbon alternatives. For businesses importing at meaningful scale who want CBAM to be someone else's problem.
Learn more about Secret Label →We can verify whether your existing Chinese or Vietnamese suppliers have the capabilities and systems in place to provide CBAM-compliant embedded carbon declarations — before you find out the hard way in January 2027 that they can't.
Learn more about Verification →We're based in London (71-75 Shelton St, London WC2H 9JQ) and work with UK businesses of all sizes. Whether you're importing a few tonnes of aluminium a year or running a high-volume supply chain, we can help you navigate CBAM without it becoming a compliance crisis.
UK CBAM comes into full effect on 1 January 2027. Unlike the EU CBAM — which had a transitional phase from October 2023 to December 2025 where only reporting was required but no certificates needed to be purchased — the UK CBAM as currently structured does not include a similar transitional period. From January 2027, UK importers of in-scope goods will need to declare embedded carbon and will accumulate certificate obligations from their first shipment. Annual certificate surrender is expected by 31 May of the following year.
Potentially, but the charge may be reduced or eliminated. If your EU supplier is covered by the EU Emissions Trading System (EU ETS) and has already paid for the carbon content of their goods, UK CBAM rules allow for a deduction equivalent to the carbon costs already borne. In practice, this means imports from EU producers under EU ETS will attract little or no UK CBAM charge. Goods from countries without equivalent carbon pricing (China, most of Southeast Asia) will not benefit from this deduction.
This is extremely common, particularly with smaller or more domestically focused manufacturers. The first step is to explain what you need: a declaration of the specific CO₂ equivalent emissions (in tonnes) per tonne of product manufactured. For suppliers who have been exporting to the EU, they may already have this in their EU CBAM reporting files. If your supplier genuinely cannot provide verified carbon data, HMRC will apply its default (high-end) values to your imports.
You can try, but market conditions and customer contracts will determine whether you can. CBAM is a real cost that many UK businesses will need to absorb or pass through — and your competitors importing the same goods from the same origins will face identical costs, which may make price increases easier to justify. What's certain is that ignoring CBAM and hoping it goes away will not be a viable strategy.
No — if you're buying goods that have already been imported into the UK and are being sold domestically, CBAM was the concern of whoever did the importing. CBAM applies at the point of import into the UK, not at the point of sale. If your supplier is a UK-based importer or distributor, they bear the CBAM obligation. The direct CBAM obligation falls on whoever submits the import declaration to HMRC.
The businesses that will handle CBAM best are the ones taking action now — getting supplier carbon data, reviewing their product specifications, and building compliant sourcing partnerships. Let's start that conversation today.
Epic Sourcing UK · 71-75 Shelton St, London WC2H 9JQ · hello@epicsourcing.co.uk
