The UK government has published the rate calculation method and default emissions values for its Carbon Border Adjustment Mechanism, which takes effect on January 1, 2027. The rules cover iron and steel, aluminum, cement, fertilizer, and hydrogen imports, and are part of the Finance Act 2026. The goal is to align the carbon cost on imports with what domestic producers pay under the UK Emissions Trading Scheme. Using third-quarter 2026 average UK ETS prices of £58.15 per tonne, the illustrative rates are £9.69 per tonne of CO2 equivalent for steel, £9.79 for aluminum, £8.78 for cement, £9.24 for hydrogen, and £1.45 for fertilizer. Quarterly tax rates will track ETS clearing prices, baseline free allocations, and phase-out reduction factors. Importers can use the published default emissions values for compliance, or submit verified actual data if their emissions are lower. The October 16 publication gives importers roughly 14 months to set up reporting. Companies with cleaner production should compare default values against actual emissions, because the difference directly changes the tax bill.
