How is the UK CBAM charge calculated?

The formula

CBAM liability on your imports breaks into three parts:

embodied emissions (tCO2e) × CBAM rate (£ / tCO2e) − overseas carbon price relief

Each part has its own rules, and each is where the money is either spent or saved.

Part one: embodied emissions

Embodied (or embedded) emissions are the greenhouse gases attributable to producing the goods you import. You can arrive at this figure two ways. You can use actual, independently verified emissions data for your specific goods, or you can use a default emissions value published by government for that good. There is one default per good. A mark-up is applied to defaults so they are not cheaper than verified data, which means that where your overseas producer is cleaner than the default, actual verified data usually produces a lower figure. The default versus actual guide covers this choice, and it is the single biggest lever you have over your bill.

The per-good default emissions values themselves are not yet published as at 12 July 2026, so any estimate that uses a default is working from a placeholder until HMRC publishes the official figure.

Part two: the CBAM rate

The rate is sector-specific and set and published by government quarterly from 1 January 2027. It is based on the average UK Emissions Trading Scheme (UK ETS) auction price for the preceding quarter, adjusted downward to reflect the proportion of emissions covered by free allowances in that sector. The adjustment matters: it is designed so the CBAM rate mirrors the net carbon cost a UK producer actually bears after free allowances, rather than the headline ETS price. Because the rate tracks a market price, it moves every quarter, which is why it is a permanent thing to keep an eye on rather than a fixed number.

An illustrative or example rate is expected to be published in Autumn 2026 ahead of the first live quarterly rate. Until then, there is no official rate, so any number used to size a charge is illustrative, not official.

Part three: overseas carbon price relief

If the embodied emissions in your goods have already been subject to a qualifying carbon price abroad, an overseas ETS, a carbon tax or an equivalent, your UK CBAM liability is reduced to reflect it. You need documentary evidence of the carbon price paid, and the relief is applied using HMRC-published exchange rates for the relevant quarter. For goods from the EU, where an ETS operates, this relief can be material, which is why country of origin is part of any sensible estimate. See the scope guide for how origin also interacts with your position.

Worked, in principle

Suppose you import 300 tonnes of a good in a year. Multiply the tonnage by the default emissions factor for that good to get embodied emissions in tCO2e. Multiply that by the quarterly rate in pounds per tCO2e to get the gross charge. Then subtract any qualifying overseas carbon price already paid. The arithmetic is simple; the honesty is in the inputs. Our methodology page sets out exactly which constants are official and which are placeholders.

Frequently asked questions

Sources

• GOV.UK, Introduction of the Carbon Border Adjustment Mechanism, on the charge structure, actual-versus-default emissions and overseas carbon price relief. gov.uk
• GOV.UK, CBAM Policy Summary, on the quarterly rate set from the UK ETS auction price adjusted for free allowances. gov.uk

Content current as of 12 July 2026. The per-good default values and the quarterly rate are pending publication; an illustrative rate is expected Autumn 2026. Re-check the primary source before relying on any figure.