Most ESG data requests arrive with a deadline set by a tender or a customer’s reporting calendar. The UK Carbon Border Adjustment Mechanism (CBAM) brings one with a tax bill attached. From 1 January 2027, every tonne of in-scope steel, aluminium, cement, fertiliser or hydrogen imported into the UK carries a carbon charge, calculated either from the overseas producer’s verified emissions or from a government default.
On 16 October 2026, HMRC put numbers on both sides of that choice. It published illustrative CBAM rates for each sector and an updated draft of the default values, which carry a 10% markup in every sector except fertiliser. For the first time, a supplier’s actual emissions data has a direct cash value to the company buying from it.
If you run sustainability at a UK company that imports these goods, the import team will probably come to you for that data. This post covers who pays, how the rate works, what to ask a producer for, and how to keep the evidence.
Who pays UK CBAM
The liable person is the importer: the business named on the customs declaration, or the business on whose behalf goods are imported. Using a freight forwarder, customs broker or agent does not move the liability to them.
Registration is triggered by value. From 1 January 2027 you must register if either test is met:
- Forward test: you expect to import CBAM goods worth £50,000 or more in the next 30 days.
- Rolling test: on the first day of each month, your CBAM imports over the previous 12 months reach £50,000. Imports before 1 January 2027 do not count.
Goods with a UK place of origin are out of scope, as are some scrap products. The UK and EU have committed to linking their emissions trading schemes, and the government says this will exempt EU-origin goods once the link is in place. Until then, check the commodity code of each product line against HMRC’s list.
How the rate is built
The charge is embodied emissions multiplied by a sector rate. Embodied emissions are the weight of the imported goods multiplied by an emissions intensity in tonnes of CO2e per tonne of product.
The rate follows the UK Emissions Trading Scheme. HMRC takes the average UK ETS auction price for the previous quarter and reduces it to reflect the free allowances UK producers in that sector still receive. Its cement example uses a Q3 2026 average price of £58.15, an 87.1% free allocation share and a 2027 phase-out factor of 97.5%:
£58.15 x [1 - (87.1% x 97.5%)] = £8.78 per tCO2e
The illustrative rates for the other sectors are £9.69 for iron and steel, £9.79 for aluminium, £9.24 for hydrogen and £1.45 for fertiliser. Three points matter for planning:
- These are illustrative. HMRC says they show what would apply on current data and are not forecasts. The first official rates, for January to March 2027, will be published before the end of 2026.
- Rates are reset every quarter as the ETS price moves.
- The phase-out factor falls over time as free allocation is withdrawn, so the share of the carbon price passed through to importers rises. Today’s modest per-tonne rates are a starting point.
Why the default values make supplier data worth money
When calculating embodied emissions, an importer has two options: use the producer’s verified emissions intensity, or use the government default for that commodity code. HMRC’s notice states that “actual verified emissions data is preferable” and that defaults are designed so there is “no advantage” in using them.
The draft defaults apply from 1 January 2027 to 31 December 2028. They are trade-weighted averages built from EU data, with a 10% markup in every sector except fertiliser. From 2029 the UK plans to move to country-specific defaults, and the markup will be reviewed then.
A worked example
Take 1,000 tonnes of unalloyed aluminium slab (CN 76011010). The draft default is 2.058 tCO2e per tonne. At the illustrative aluminium rate of £9.79:
- Using the default: 2,058 tCO2e x £9.79 = roughly £20,150.
- The markup alone: about 187 tCO2e of that figure, or roughly £1,830.
- Using verified data: if the producer’s verified intensity were, hypothetically, 1.6 tCO2e per tonne, the charge would be about £15,660.
Scale that across a year of shipments and a rising rate, and the case for asking producers for verified data makes itself. It is also a figure your finance director will want to see, because the difference lands in cost of goods.
What to ask an overseas producer for
A number in an email will not do. To report actual emissions, you must hold evidence that the data has been verified. If you cannot evidence verification, you must use the default. Ask each producer for:
- The installation where the goods were made, and the commodity code of each product.
- The emissions intensity in tCO2e per tonne, calculated under the UK CBAM system boundaries, including emissions from any precursor goods for complex products.
- The monitoring period. Intensity is reported per calendar year. For goods imported in 2027 you use verified 2027 data, or 2026 data if 2027 is not yet verified.
- A verification report or verification summary covering that intensity and period.
- The verifier’s details. The verifier must be independent of the installation, accredited by an eligible accreditation body to ISO 14065:2020 and ISO/IEC 17029:2019, and accredited for the right activity. A fertiliser specialist cannot verify a steel plant.
Start the conversation now. Many producers outside the EU have never been asked for installation-level data, and verification takes time to arrange.
Keep the evidence where the other requests live
HMRC requires importers to keep CBAM records for six years, including the verification report behind every intensity reported, with a fixed penalty of £500 for failing to keep records. That makes CBAM evidence one more thing to file alongside the customer questionnaires, lender requests and supplier data you already handle.
The approach that works for CBAM is the same one we set out for answering customer and lender ESG data requests: one dataset, with every figure carrying its source, period, method and approval. It also mirrors what your own customers’ assurers now expect of you, covered in what your customer’s auditor will test. For the full calendar, see our ESG reporting deadlines page.
Horizon ESG for sustainability teams holds supplier evidence in that one record, with each verified intensity linked to its report, period and producer. Nova, the built-in assistant, drafts answers only from figures that carry their evidence, labels anything estimated, and nothing goes out until a person approves it. Your finance team gets the same record, which matters when the cost of a default shows up in their numbers; our page for finance teams explains the controls.
If the import team has already asked you about CBAM, book a short demo and bring a supplier with you. We will show you how a verified intensity sits alongside the rest of your evidence.
Sources: HMRC, Carbon Border Adjustment Mechanism (CBAM): illustrative CBAM rates and worked example, 16 October 2026; HMRC, The Carbon Border Adjustment Mechanism (Default Values) Force of Law Notice (Draft), updated 16 October 2026; HMRC, CBAM policy summary, updated 16 October 2026; GOV.UK guidance on the importer, registration dates, emissions intensity and record keeping for CBAM. Checked 20 October 2026. Rates and default values are draft or illustrative and may change before 1 January 2027.
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