Draft primary legislation for Carbon Border Adjustment Mechanism (CBAM) was published in April 2025 for technical consultation. At Budget 2025 government announced that indirect emissions associated with the production of CBAM goods will not be included in scope of CBAM at its implementation on 1 January 2027. Their inclusion in CBAM scope will be delayed until 2029 at the earliest. This is to reflect continued support for the Energy Intensive Industries (EII) Compensation Scheme
CBAM is effectively a new tax aimed at reducing carbon emissions. It will impact companies importing (and potentially exporting to the EU) and specifying products made with aluminium, cement, iron and steel (it is likely to be extended to cover other products such as glass in the future).
CBAM imposes a carbon cost to ensure imports face a comparable carbon price to goods produced domestically. This mechanism is designed to prevent “carbon leakage,” where companies might relocate production to countries with less stringent emissions regulations. .
The UK CBAM will come into force on 1 January 2027 and will apply to businesses importing £50,000 or more of CBAM goods over a 12-month period.
The UK government has published Finance (No.2) Bill 2025-26 on the UK Parliament Bills website. This includes the primary legislation for CBAM which you can find here. To download a copy of the Bill, click ‘Get file’ in ‘Bill 342 2024-25 (as introduced)’.
CBAM primary legislation can be found at Part 5:
Clauses 139-155 (pages 147-159)
Schedules 15 – 18 (pages 471-506)
Further changes may arise as a result of Parliamentary scrutiny, but the deadlines are likely to stand and it is vital that companies start understanding the potential costs and how this may impact upon estimates for future projects. Companies importing directly are recommended to look at any requirements that may be imposed on them. Contractors who may be preparing tenders for projects that run past 1st January 2027 should be speaking to their suppliers about any potential additional costs that CBAM might place on their project
You can find more information on CBAM in the Factsheet here.
FIS Sustainability Hub
We look at some of the key actions that you can take and also some of the wider sector initiatives that can support your business in setting a sustainability strategy.