The UK has published an illustrative Carbon Border Adjustment Mechanism (CBAM) rate of £9.69 per tonne of CO₂ equivalent for iron and steel. Released on October 16, the figure demonstrates the calculation method; it creates no tax liability and is not a forecast of the rate that will apply when the mechanism starts on January 1, 2027.
The rate is based on the average UK Emissions Trading Scheme (UK ETS) auction price for July–September 2026 — £58.15 per tonne of CO₂ equivalent — and preliminary free-allocation data. The free-allocation phase-out reduction factor for all CBAM sectors in 2027 is 97.5%.
HM Revenue & Customs (HMRC) said data on the installations and free allowances included in the calculation are still being checked by the UK ETS Authority. The review could change the final baseline free-allocation percentage and the CBAM rate for the first quarter of 2027. Official rates for that quarter will be published before the end of the year.
Rates will be updated quarterly. Importers will have to use the rate for the relevant sector and the quarter in which the goods entered the UK.
Default emissions values
The government has also published default emissions values for selected products. These may be used when actual emissions cannot be established. In 2027 and 2028, a single value will apply to each iron and steel product CN code, regardless of country of origin; the applicable value is determined by the eight-digit code.
The values are trade-weighted averages, excluding data on imports from the EU. A 10% markup was applied to iron and steel, as well as most other sectors. The government says default values should not give importers an advantage over calculating actual emissions and are intended to support the move to actual emissions reporting.
| CN code | Product | Default emissions value (tCO₂e/mt of product) |
| 72031000 | Direct reduced iron (DRI) | 1.149 |
| 72071114 | Certain square or rectangular semi-finished products containing less than 0.25 percent carbon, with a thickness of up to 130 mm | 2.856 |
| 72071210 | Rolled or continuously cast semi-finished products containing less than 0.25 percent carbon, with a width at least twice their thickness | 3.571 |
| 72083900 | Non-pickled hot rolled coil, at least 600 mm wide and less than 3 mm thick | 3.468 |
| 72091790 | Certain cold rolled coils, at least 600 mm wide and 0.5–1 mm thick | 2.648 |
| 72104900 | Certain non-corrugated galvanized flat products, at least 600 mm wide | 3.049 |
| 72131000 | Ribbed hot rolled bars and rods in coils | 3.309 |
| 72142000 | Bars and rods with ribs or other deformations produced during rolling | 3.040 |
The UK plans to introduce country-specific default values from 2029 and review the markup. The government said excluding EU data should better reflect emissions in goods for which default values are likely to be used. It also linked the approach to plans to connect the UK and EU emissions trading schemes: if they are linked, EU-origin goods will be exempt from the UK CBAM.
HMRC guidance says default values may be used for precursor goods while actual emissions data is used for the processes that turn those inputs into finished products. The reverse combination is not allowed: actual data cannot be used for precursor goods alongside a default value for the finished product. A CBAM return submitted using default values cannot later be amended to replace them with actual emissions data.
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