Ever wondered why some countries are introducing Border Adjustment Mechanism‘s (BAMs)? BAM’s – or Carbon Border Adjustment Mechanism’s (CBAM’s) are a tariff on imported goods based on how much carbon was emitted during production. In other words, if you produce abroad under lax environmental rules, you’d pay extra on entry. That levels the playing field and curbs what’s called carbon leakage—where businesses shift production to places with weaker climate rules to avoid emissions costs.¹
What's the Global Rollout Looking Like?
• The EU led the way: its CBAM entered a transitional (reporting-only) phase on 1 October 2023, covering sectors like steel, cement, aluminium, fertilisers, electricity, and hydrogen. From 2026, importers need to buy CBAM certificates, effectively paying for embedded emissions.²,⁴
• The UK has a similar plan: announced on 18 December 2023 and confirmed via government response on 30 October 2024, a UK CBAM will start on 1 January 2027. It covers aluminium, cement, fertiliser, iron, steel, and hydrogen—but excludes glass and ceramics for now.³,⁵
What’s in It for Business—and for the Planet?
• Fair competition: Companies that already pay for their emissions domestically aren’t undercut by cheaper, dirty imports.
• Incentivising cleaner global production: Countries exporting to the EU or UK now have a clear reason to decarbonise their manufacturing.
What’s the Catch?
• Complexity & compliance burdens: Tracking emissions for every imported product, especially in long supply chains, is a headache.
• Political pushback: Some developing nations view CBAMs as unfair taxes and worry about WTO implications - fightback is already brewing.
Alternatives & Risks of Inaction
An alternative is forming “climate clubs” with shared carbon pricing agreements—but getting global consensus is a heavy lift. Without mechanisms like CBAM, ambitious local climate policies risk being undermined as factories—and emissions—simply shift elsewhere. Let’s not let good climate policy be diluted
Is Your Business Ready for CBAM?
If your company exports steel, aluminium, cement, fertilisers, electricity, hydrogen or any other product captured under the EU or UK CBAM, the clock is already ticking. From 2026 in the EU and 2027 in the UK, every shipment could carry a carbon price tag—unless your emissions are measured, verified, and aligned with destination market rules.
Don’t wait until the first invoice lands. The businesses that will thrive under CBAM are those that:
• Understand their product’s embedded emissions
• Implement robust monitoring and reporting systems now
• Engage with buyers on decarbonisation strategies
• Leverage compliance as a competitive advantage
At FarmN, we help exporters quantify, verify, and certify carbon footprints so you can trade confidently and stay ahead of your competitors.
Act now—contact our team today to discuss how we can prepare your products for the CBAM era and protect your market access.
For inquiries, reach out to FarmN.
Ref # Source Details
1 “The Carbon Border Adjustment Mechanism (CBAM) is the EU's tool…”, European Commission — “CBAM will apply in its definitive regime from 2026, with a transitional phase of 2023 to 2025.” (Taxation and Customs Union, transition-pathways.europa.eu, GOV.UK, mfat.govt.nz, Lexology, KPMG)
2 “EU Carbon Border Adjustment Mechanism (CBAM) takes effect with transitional phase”, ICAP Carbon Action — “From 1 October 2023… transitional phase… report embedded emissions… purchase… from 2026.” (ICAP Carbon Action)
3 “UK CBAM announced for 2027”, KPMG UK — “On 18 December 2023, the UK Government announced its plans to implement a carbon border adjustment mechanism… from 2027.” (KPMG)
4 “UK outlines details for Carbon Border Adjustment Mechanism introduction from 2027”, ICAP Carbon Action — “On 30 October 2024, the UK Government published its response… UK CBAM… begin in January 2027.” (ICAP Carbon Action)
5 “UK Carbon Border Adjustment Mechanism (UK CBAM): What you need to know”, Linklaters Sustainable Futures (Dearbhla Cantwell) — “In December 2023, the UK government announced its intention… from January 2027… will apply to certain carbon intensive imported goods… aluminium, cement, fertiliser, iron & steel, hydrogen… glass/ceramics excluded initially.” (sustainablefutures.linklaters.com)
