UK exporters warned on carbon levy deadline

The CBAM¹ is a tariff on carbon-intensive imports into the EU, designed to tackle ‘carbon leakage’ (the shifting of carbon-intensive production abroad to countries where less stringent climate policies are in place).

UK businesses which export iron, steel, aluminium, fertiliser, concrete, hydrogen and electricity to the EU, where the UK business also acts as the importer in the EU via a local office or local representative, have only until 31 January to register and make a declaration under the CBAM².

For other UK exporters who sell relevant products to EU customers it will be the EU customer who is treated as the importer and who has the obligation to register and submit CBAM declarations. However, UK businesses will still need to supply relevant information about these products to the EU importer so they can calculate the CBAM declaration.

The CIOT is highlighting the importance of ensuring compliance within the next week, as failure to submit accurate CBAM declarations may result in penalties ranging from €10 to €50 per tonne of unreported emissions during this transition period.

Mark Feldman, co-chair of the CIOT’s Climate Change Working Group, commented:

"The EU’s CBAM is a groundbreaking policy, and governments around the world will be watching it closely to see how successful it is at achieving its aims, as well as assessing how fairly it treats their exporters.

“However, as the first CBAM reporting deadline approaches, many affected businesses – including some in the UK – are still underprepared, and in many cases unsure how to access to the data needed to comply with this new obligation.  Affected businesses require further awareness and clarity to help them understand the CBAM as it develops.”

The UK government has recently announced plans to introduce a UK CBAM by 2027.

In its consultation response³, the CIOT recommended that the UK’s CBAM should mirror the EU’s CBAM rules as far as possible to reduce complexity for UK businesses. However, the UK CBAM will differ slightly from the EU CBAM, with the UK regime including glass and ceramics but excluding electricity.

It is unclear whether the government will implement a data collection period similar to the EU CBAM before the full implementation of carbon leakage policy measures.

Notes for editors

1. More at Carbon Border Adjustment Mechanism - European Commission (europa.eu)
2. Summary of European Commission guidance on the EU CBAM for UK exporters
3. Read the CIOT’s response to the government’s consultation here