Embodied carbon becomes a pricing factor for construction materials as CBAM deadlines approach

Construction materials now carry a direct carbon cost as the EU and UK carbon border adjustment mechanisms (CBAM) take effect. The EU's definitive CBAM starts in January 2026, and the UK's version follows in January 2027. This means embodied carbon is no longer just an environmental metric but a core pricing variable, similar to currency fluctuations or commodity price hikes. Steel, cement, and aluminium are the most affected, with steel prices already rising 2.7% in the UK from December 2025 to January 2026 as buyers moved ahead of the EU levy. For project teams, the key takeaway is that carbon intensity now translates directly into financial exposure. Using scrap-based electric arc furnace steel instead of blast furnace steel, or substituting cement with GGBS or PFA in concrete, can reduce both carbon liabilities and costs. However, the UK CBAM initially covers only direct emissions, while the EU includes indirect emissions from electricity use, creating a compliance gap. Importers must provide verified emissions data to avoid punitive default values. The proposed expansion to downstream products by 2028 will bring prefabricated buildings and lifts into scope, so early adaptation is critical.