What was published
In a written statement to Parliament on 16 October 2026, the Financial Secretary to the Treasury set out two of the inputs that decide what an importer pays under the UK Carbon Border Adjustment Mechanism, which starts on 1 January 2027. HMRC put the detail on gov.uk the same day:
- Illustrative CBAM rates for each of the five sectors, with a worked example for cement. These are not the real rates. The government says they are based on preliminary data, create no tax liability, and that the official rates for January to March 2027 will be published before the end of 2026. From then on, a new rate is published at the start of each quarter.
- Default emissions values for every CBAM good, listed by commodity code. These are final and apply for 2027 and 2028.
If you're new to CBAM, start with our explainer on the UK CBAM and what it means for suppliers, which covers who registers, the £50,000 threshold and the filing dates. This post covers only what is new.
The illustrative rates
| Sector | Illustrative rate, per tonne CO2e |
|---|---|
| Iron and steel | £9.69 |
| Aluminium | £9.79 |
| Cement | £8.78 |
| Fertiliser | £1.45 |
| Hydrogen | £9.24 |
The rate is not a flat carbon price. It starts from the average UK Emissions Trading Scheme auction price for the previous quarter (£58.15 for July to September 2026), then knocks off the share of UK producers' emissions still covered by free allowances. In the cement example, free allowances cover 87.1% of emissions and the 2027 phase-out factor is 97.5%, so the rate is £58.15 × [1 − (87.1% × 97.5%)], about £8.78. Fertiliser's rate is much lower because a bigger share of that sector's emissions is covered by free allowances. As free allocation is phased out, the reduction factor falls and, other things being equal, the rates rise.
What default values mean if your supplier can't give you a figure
The tax is charged on the emissions embodied in the goods: the weight imported times an emissions intensity, in tonnes of CO2e per tonne of product. The importer either reports a verified intensity from the overseas producer or uses the government's default for that commodity code. The defaults are built from trade-weighted averages of non-EU imports, then marked up by 10% in every sector except fertiliser. The statement is open about why: the government wants there to be no advantage in using a default rather than finding out the real figure.
An illustration. A builders' merchant imports 500 tonnes of Portland cement (commodity code 25232900) from a supplier that has no verified data. The default is 1.375 tonnes of CO2e per tonne, so the embodied emissions are 687.5 tonnes. At the illustrative cement rate that would be about £6,036, of which roughly £549 is the markup alone. The real bill will depend on the official rate for the quarter of import and any carbon price already paid abroad.
Two rules in HMRC's guidance matter here. Once you file a return using default values, you cannot amend it later with actual data. And for 2027 imports, the producer's verified figure will normally need to cover calendar year 2027 (with 2026 as a fallback in some cases), so it won't exist until 2028. So if you want to use actual data, the conversation with your supplier needs to start now, not when the return is due in 2028.
What to do now
- If you import CBAM goods: look up the default for each of your commodity codes, multiply by your expected tonnage and the illustrative rate for a rough budget figure, and ask each supplier whether they will have verified emissions per tonne for 2027.
- If you sell to an importer: expect to be asked for your emissions per tonne of product. A figure below the default is now worth real money to your customer, and a supplier who can't give one may find the default's markup priced into negotiations.
- If you buy these materials from a UK merchant: you don't register, but some of this cost may reach your prices from 2027.
Knowing the emissions in your own products is useful well beyond CBAM. The same per-tonne figure is better Scope 3 data for your customers than any spend-based estimate, and it is what customer questionnaires increasingly ask for. Our post on what customers can ask of small suppliers and the guide to answering a customer's carbon data request cover how to respond.
How Carbon Recycling helps
Carbon Recycling doesn't calculate CBAM or file CBAM returns, and it doesn't produce verified product footprints. It helps with the reporting around them.
On the Growth plan, supplier data requests let you ask suppliers for the emissions behind what they sell you through a secure link, review the figure and method they send, and add it to your Scope 3. Without supplier data, purchased steel falls back to a spend-based estimate: Defra's 2023 multiplier for basic iron and steel is 0.77428 kg CO2e per pound, so £20,000 of steel counts as 15.49 tonnes whatever the mill actually emitted. A supplier's per-tonne figure replaces that average with something that reflects the real material, which is how a switch to lower-carbon steel shows up in your footprint. Our post on spend-based Scope 3 explains the limits of the estimate.
If customers are sending you questionnaires, the free supplier questionnaire answer bank gives model answers to the 20 questions customers ask most, filled in from your own figures.