The UK is set to implement a Carbon Border Adjustment Mechanism (CBAM) in 2027, introducing carbon-linked charges on imported steel, aluminum, cement, hydrogen, and fertilizers. This policy aims to prevent carbon leakage but creates significant commercial risks for large-scale energy projects like offshore wind and nuclear power, which rely heavily on global supply chains for carbon-intensive materials. Developers and investors must move beyond simple compliance to manage these financial pressures. Strategies to mitigate cost increases include specifying lower-carbon materials during the design phase and explicitly defining carbon cost allocations in procurement contracts to avoid disputes and project delays.
