EU and UK CBAM in 2026–2027: A Practical Compliance Guide

EU and UK CBAM requirements are creating new customs, emissions-data and financial obligations for importers, exporters and manufacturers.

The Carbon Border Adjustment Mechanism is now an immediate trade, customs, emissions-data and financial issue for organisations moving carbon-intensive goods across borders.

The European Union’s definitive CBAM regime has applied since 1 January 2026. The United Kingdom is introducing a separate CBAM from 1 January 2027. Although both mechanisms are intended to address carbon leakage, they differ in legal responsibility, financial structure, reporting processes and product scope.

Importers, exporters and manufacturers should not treat CBAM as a one-off sustainability report. Effective compliance requires control over product classification, customs information, production routes, supplier data, embedded-emissions calculations, evidence and financial exposure.

What is CBAM?

A Carbon Border Adjustment Mechanism places a carbon-related financial obligation on specified imported goods based on the greenhouse-gas emissions associated with their production.

Its purpose is to reduce carbon leakage. Carbon leakage occurs when production or investment moves to jurisdictions with lower carbon costs or less stringent climate policies.

In operational terms, CBAM links four areas that are often managed separately:

• customs and commodity classification;
• supplier and installation data;
• greenhouse-gas calculation;
• tax or certificate exposure.

This is why CBAM requires coordination between procurement, customs, logistics, finance, sustainability, tax and legal teams.

What changed under EU CBAM in 2026?

The EU CBAM definitive regime started on 1 January 2026. Importers of covered goods, or their relevant indirect customs representatives, must operate within the authorised CBAM declarant framework.

The definitive regime is materially different from the earlier transitional reporting phase. It introduces formal financial and compliance obligations linked to embedded emissions.

Affected EU importers may need to manage:

• authorised CBAM declarant status;
• import controls;
• embedded-emissions information;
• supplier and installation records;
• annual CBAM declarations;
• CBAM certificate calculations;
• certificate surrender;
• verification;
• evidence retention.

The European Commission’s Definitive CBAM Registry supports importers and installation operators with reporting and compliance processes.

The first EU annual CBAM declaration covering 2026 imports is due by 30 September 2027, together with the corresponding certificate surrender.

When does UK CBAM begin?

UK CBAM is scheduled to begin on 1 January 2027.

It will apply a carbon price to specified goods imported into the UK from sectors considered at risk of carbon leakage. Unlike the EU mechanism, UK CBAM is structured as a tax-based adjustment rather than an EU-style certificate system.

The UK government currently identifies the following sectors for initial coverage:

• aluminium;
• cement;
• fertiliser;
• hydrogen;
• iron and steel.

Only specified products within these sectors will be covered. Applicability depends on the relevant commodity code and detailed product scope, not merely the industry description.

Organisations importing affected goods into the UK should prepare before 2027 because supplier engagement, product classification and emissions-data collection can take several months.

EU and UK CBAM: Key Differences

TopicEU CBAMUK CBAMStart dateDefinitive regime from 1 January 2026Scheduled from 1 January 2027Responsible partyEU importer or relevant indirect customs representative within the authorised declarant frameworkUK importer or responsible taxable personFinancial mechanismCBAM certificatesTax-based liabilityMain sectorsCement, iron and steel, aluminium, fertilisers, electricity and hydrogenAluminium, cement, fertiliser, hydrogen, iron and steelMain reporting routeDefinitive CBAM Registry and annual declarationUK tax, reporting and evidence processSupplier roleProvide installation, production and emissions informationProvide production and emissions information to support the UK importerMain financial exposureCertificates linked to embedded emissions and EU carbon pricingTax liability linked to embedded emissions and the applicable UK CBAM ratePrincipal riskAuthorisation, verification, reporting and certificate managementClassification, supplier readiness, emissions calculation and tax-process readiness

The EU and UK mechanisms should not be treated as one combined regulation. A company trading in both markets requires a common data framework but separate legal and reporting assessments.

Which products are covered by CBAM?

CBAM does not automatically apply to every product containing steel, aluminium, cement or another relevant material.

Formal scope depends on:

• commodity or CN code;
• product description;
• customs classification;
• country of origin;
• import route;
• quantity;
• exemptions or thresholds;
• the legislation applicable in the destination market.

Aluminium

Potentially covered aluminium products may include certain unwrought aluminium products, bars, rods, sheets, plates, tubes and related goods.

The exact scope must be confirmed through commodity-code review.

Cement

Covered cement products may include specified cement and clinker categories.

Relevant data can include production route, clinker content, fuel use, process emissions and installation output.

Fertilisers

CBAM exposure can depend on fertiliser type, production process, nitrogen content, precursor materials and associated process emissions.

Hydrogen

Hydrogen assessments require information on the production route, electricity source, fuel inputs and installation-level emissions.

Iron and steel

Iron and steel is a broad sector grouping. Individual goods may require detailed commodity-code analysis, particularly where products contain precursors or multiple production stages.

Electricity

Electricity is included in the current EU CBAM scope but is not among the initial UK CBAM sectors identified by the UK government.

Who is responsible for CBAM compliance?

Formal responsibility normally sits with the importer or another specifically recognised party under the relevant regime.

However, the importer often does not control the data required to calculate embedded emissions.

The manufacturer or exporter may hold:

• production-route information;
• energy-consumption records;
• raw-material data;
• precursor information;
• direct-emissions data;
• indirect-emissions data;
• installation output;
• carbon-price evidence;
• verification documents.

The practical distinction is therefore:

The importer normally carries the formal CBAM obligation, but the manufacturer often controls the production and emissions data required to meet it.

Importer responsibilities

The importer may need to:

• confirm commodity classification;
• determine whether the goods are in scope;
• confirm the legal reporting entity;
• collect supplier and installation information;
• maintain records;
• calculate or obtain embedded emissions;
• manage declarations, certificates or tax liabilities;
• retain defensible evidence.

Exporter and manufacturer responsibilities

The exporter or manufacturer may need to:

• identify the production installation;
• provide production-route information;
• provide activity and emissions data;
• disclose precursor information;
• explain calculation methods;
• provide verification evidence;
• respond to importer data requests;
• update information when production changes.

Adviser responsibilities

An adviser can support the process but should not be presented as automatically assuming the legal role of importer, authorised declarant or taxpayer.

Support may include classification screening, supplier engagement, calculation, evidence management, reporting preparation and readiness assessment.

What supplier data is required for CBAM?

Supplier data is one of the main operational constraints in CBAM compliance.

A complete supplier data request may need to include the following.

Installation details

• installation name;
• installation address;
• country of production;
• operator details;
• reporting period;
• production route;
• installation identifier where available.

Production data

• production volume;
• product quantity;
• fuel consumption;
• electricity consumption;
• raw materials;
• precursor materials;
• process inputs;
• production losses;
• allocation basis.

Emissions data

• direct emissions;
• applicable indirect emissions;
• process emissions;
• precursor emissions;
• emission-factor sources;
• calculation methodology;
• actual or default values;
• verification status.

Carbon-price data

• carbon price paid in the country of production;
• currency;
• reporting period;
• exemptions, rebates or compensation;
• supporting invoices or official evidence.

Evidence

• supplier declarations;
• calculation workbooks;
• metering data;
• fuel invoices;
• electricity records;
• production records;
• emissions-factor references;
• verification statements;
• document-control records.

How are embedded emissions calculated?

Embedded emissions represent the greenhouse-gas emissions associated with producing the covered good.

The calculation can involve several stages.

1. Define the production boundary

The organisation must identify which processes, inputs and precursors are included under the applicable methodology.

2. Collect installation-level activity data

This may include:

• fuels consumed;
• electricity used;
• raw materials processed;
• production volume;
• process emissions;
• precursor quantities.

3. Calculate direct emissions

Direct emissions arise from sources controlled by the installation, including combustion and industrial processes.

4. Calculate applicable indirect emissions

Depending on the product and methodology, electricity-related emissions may also be included.

5. Add precursor emissions

Complex goods may contain precursor materials whose embedded emissions must be included.

6. Allocate emissions to products

Where an installation produces multiple products, emissions must be allocated using a documented and defensible method.

7. Determine embedded emissions per unit

The total relevant emissions are divided or allocated across the production volume to calculate embedded emissions per tonne or other applicable product unit.

8. Record evidence and assumptions

Every material input should be supported by a source, methodology, evidence record or documented assumption.

EU rules permit the use of Commission default values in defined circumstances, although actual installation-level data may provide a more accurate commercial assessment.

Common CBAM compliance risks

Incorrect commodity classification

A product may be wrongly included or excluded because the organisation relies only on a commercial product description.

Control: Complete a commodity-code and product-scope review using customs records and technical product details.

Unclear legal responsibility

The exporter, importer and customs representative may each assume another party is responsible.

Control: Document the legal entity, importer, declarant, representative and data owner for every trade route.

Missing supplier data

Suppliers may not understand the requested format or may not have installation-level information.

Control: Use structured questionnaires, guidance notes, evidence templates and escalation procedures.

Unsupported emissions factors

Suppliers may provide a total emissions figure without explaining the calculation basis.

Control: Require methodology, activity data, emissions factors and source documentation.

Incomplete precursor information

The supplier may disclose only final-stage production emissions.

Control: Identify relevant precursors and request embedded-emissions information for each material stage.

Weak verification readiness

Calculations may be technically complete but lack an auditable evidence trail.

Control: Maintain source-data references, version control, calculation approval and exception logs.

Poor customs and sustainability integration

Customs teams may hold commodity and volume data while sustainability teams hold emissions information.

Control: Create one controlled CBAM register linking trade, supplier, product, installation and emissions records.

Late supplier engagement

A supplier may require months to provide usable information.

Control: Begin engagement before the formal reporting or tax deadline.

A practical six-step CBAM readiness plan

Step 1: Screen products and commodity codes

Review product descriptions, commodity codes, origin, quantities and trade routes.

Classify each product as:

• in scope;
• potentially in scope;
• out of scope;
• requiring further classification review.

Step 2: Confirm legal responsibility

Identify:

• importer;
• exporter;
• manufacturer;
• customs representative;
• authorised declarant where relevant;
• UK taxable person where relevant;
• internal data owner.

Step 3: Map suppliers and installations

Create a supply-chain map linking each product to:

• supplier;
• production installation;
• production country;
• production route;
• precursor supplier;
• importer.

Step 4: Collect and validate data

Issue supplier requests covering production, emissions, carbon pricing and evidence.

Assess each response for:

• completeness;
• consistency;
• traceability;
• methodological suitability;
• verification status.

Step 5: Calculate embedded emissions

Apply the relevant methodology and document:

• calculation boundary;
• activity data;
• emissions factors;
• precursor treatment;
• allocation;
• default values;
• assumptions;
• data gaps.

Step 6: Implement reporting and financial controls

Establish:

• reporting calendars;
• approval workflows;
• document retention;
• certificate or tax exposure modelling;
• supplier update cycles;
• management reporting;
• regulatory monitoring.

Worked example: UK steel manufacturer exporting to the EU

A UK manufacturer supplies steel components to an EU customer.

The process may involve:

1. The products are reviewed against the applicable CN-code scope.
2. The EU customer confirms the importer and authorised declarant arrangements.
3. The UK manufacturer identifies the relevant production installation.
4. Fuel, electricity, production and precursor information is collected.
5. Direct, applicable indirect and precursor emissions are calculated.
6. The calculation method and evidence are documented.
7. The emissions data is supplied to the EU importer.
8. The importer uses the data for CBAM reporting and certificate exposure management.

The UK manufacturer may not submit the formal EU declaration, but failure to provide reliable data could affect its customer relationship, pricing and market access.

How SustainZone supports CBAM readiness

SustainZone supports importers, exporters and manufacturers with practical CBAM implementation.

Our services include:

Product and trade exposure screening

We review products, commodity codes, origin, quantities and trade routes to identify potential CBAM exposure.

Supply-chain and responsibility mapping

We identify importers, exporters, manufacturers, installations, customs representatives and internal data owners.

Supplier data collection

We prepare supplier questionnaires, evidence requests, response trackers and data-gap registers.

Embedded-emissions calculation

We calculate or review direct emissions, applicable indirect emissions, precursor emissions, allocation methods and supporting assumptions.

EU CBAM readiness

We support importer and supply-chain data preparation, reporting datasets, verification readiness and certificate-exposure analysis.

UK CBAM readiness

We support product-scope review, supplier readiness, emissions-data preparation, governance and tax-process planning.

Carbon-cost modelling

We translate embedded emissions into indicative product, supplier and financial exposure.

Managed CBAM support

We maintain registers, update calculations, track supplier responses, monitor exposure and prepare management information.

Learn more about our CBAM compliance and embedded-emissions services.

Frequently asked questions

Does CBAM apply to every imported product?

No. Applicability depends on the product’s commodity code, origin, trade route, quantity and the detailed scope of the relevant regime.

Who submits the EU CBAM declaration?

The EU importer or relevant authorised CBAM declarant is generally responsible for the formal declaration.

Does a UK exporter submit the EU declaration?

Usually not. The UK exporter or manufacturer typically provides installation, production and emissions data to the EU importer.

Can default emissions values be used?

Default values may be allowed in defined circumstances. The applicable methodology should be reviewed before relying on them.

What happens if a supplier cannot provide emissions data?

The organisation should record the data gap, engage the supplier, review whether permitted defaults are available and establish a data-improvement plan.

Is UK CBAM the same as EU CBAM?

No. They have different legal, financial and reporting structures.

When should businesses prepare for UK CBAM?

Preparation should begin before 1 January 2027 because supplier engagement, classification and emissions-data collection may take significant time.

Is CBAM only an environmental reporting requirement?

No. CBAM affects customs, procurement, finance, tax, supplier management, pricing and commercial risk.

Conclusion

CBAM is no longer a future sustainability issue. The EU definitive regime is operational, and UK CBAM is scheduled to begin on 1 January 2027.

The organisations most likely to manage CBAM effectively are those that establish a controlled process across product classification, supplier data, embedded-emissions calculation, evidence and financial exposure.

The immediate priority is to determine:

• which products are affected;
• who carries the legal responsibility;
• which installations produce the goods;
• what supplier information is missing;
• how embedded emissions will be calculated;
• what reporting or financial exposure may arise.

A structured exposure assessment provides the basis for every subsequent CBAM decision.

Request a CBAM Exposure Assessment to identify product scope, supplier-data gaps, responsibility and implementation priorities.