The UK government has published draft rules on emissions and verification that establish a framework for calculating embedded emissions in goods subject to the Carbon Boundary Adjustment Mechanism (CBAM). The mechanism is expected to enter into force on January 1, 2027 and will be applied throughout the UK, including Northern Ireland.
This is in addition to another second draft regulation that outlines the details of administrative requirements, the CBAM rate, and carbon price reductions that SteelOrbis has previously reported.
Key definitions and calculation methodologies
The draft regulations express emissions in metric tons of carbon dioxide equivalent (CO₂E) and allow for two calculation approaches.
If default values are used, emissions are calculated by multiplying the CBAM product weight by the applicable default value. When actual emission data is available, a step-by-step methodology is applied, including determining the monitoring period, calculating total production emissions, converting them to carbon dioxide equivalent, including emissions from precursor products, determining emission intensity, and multiplying by product weight.
The system explains how emissions from precursor products are included in the total emissions. The actual data is used where it is available, while the default values are applied in the absence of verified information. The regulatory documents also include data on the recalculation of emissions, allowing the conversion of non-carbonaceous gases such as nitrous oxide and fluorinated gases into carbon dioxide equivalent.
Monitoring and verification requirements
Emissions monitoring should be carried out during a certain calendar year in compliance with specific rules depending on the timing of the import of goods. Verified emission data should be evaluated by independent accredited verification organizations. These organizations are required to evaluate emission data, perform verification procedures, and issue reports containing information about the installation, monitoring periods, and accuracy of emissions calculations. The accreditation bodies will oversee the inspectors, ensuring compliance with technical standards, competence and independence.
Importers of CBAM products will be required to keep detailed records for six years. They include information about production facilities, operators, emission intensity, monitoring periods, and inspection reports. These requirements are part of the implementation of CBAM in the UK as a tax mechanism under the Finance Act 2026.
Industry concerns about competitiveness
British Trade Association
