The UK CBAM gets its numbers: HMRC publishes illustrative rates and default values

The numbers UK importers have been waiting for arrived on 16 October. HMRC published illustrative CBAM rates for each of the five sectors, a worked example of how the rate is built, and the full set of default emissions values that will apply in 2027 and 2028, with a written ministerial statement from the Financial Secretary to the Treasury setting out the design choices behind them.

The illustrative rates

Using current data, the rate would be £9.69 per tonne of embedded CO2e for iron and steel, £9.79 for aluminium, £8.78 for cement, £9.24 for hydrogen and £1.45 for fertiliser. Each rate starts from the average UK ETS auction price for the third quarter of 2026, which was £58.15, and discounts it by the share of free allowances UK producers in that sector still receive, adjusted by a phase-out factor of 97.5 per cent for 2027. The cement example shows the arithmetic: £58.15 reduced by cement's 87.1 per cent baseline free allocation gives £8.78 per tonne.

A UK rate near £10 looks far below the EU's certificate price of 82.32 euros, but the two are built differently. The UK bakes the free allocation discount into the rate itself, while the EU applies its equivalent discount through the CBAM factor on the emissions side of the calculation. On a net basis the two schemes charge on a broadly comparable footing, and both discounts shrink as free allocation phases out.

HMRC is clear that these figures create no liability. The rates that will apply to imports between January and March 2027 will be published before the end of 2026, and rates will then be set each quarter from the previous quarter's UK ETS prices.

The default values

The default values are published per commodity code, in tonnes of CO2e per tonne of product. Non-alloy pig iron, for example, runs from 1.331 to 2.698 depending on grade, hot-rolled coil sits at 2.722 and cold-rolled coil at 2.842. The ministerial statement explains how they were built: a single value per product, calculated as a trade-weighted average across the countries the UK imports from, with EU data excluded, and a 10 per cent mark-up added in every sector except fertiliser. Country-specific default values are planned from 2029, when the mark-up will also be reviewed.

The EU exclusion is worth a second look. The statement says it reflects the commitment the UK and EU have expressed to link their emissions trading schemes, which would exempt EU-origin goods from the UK CBAM. That remains a commitment rather than law, as we set out last week: the exemption needs regulations approved by the House of Commons, and nothing has been laid.

The rulebook is complete

The same week closed the last legislative gap. The House of Commons approved SI 2026/809, the regulations governing the rate calculation and carbon price relief, on 14 October, and the emissions and verification regulations were made in September. The UK CBAM now has its full legal framework in place eleven weeks before it starts.

What importers can do now

A first estimate of the January liability is now simple arithmetic: tonnes imported, times the default value for the commodity code, times the sector rate. A thousand tonnes of hot-rolled coil on default values would carry a charge of about £26,000 at the illustrative steel rate. Two features of the rules push the other way on defaults: they include the 10 per cent mark-up, and a return submitted on default values cannot later be amended with actual data. Verified supplier figures will usually cost less, and verified 2026 data can support 2027 imports, so the case for gathering real numbers before January just got easier to make.

CBAM-Assured trains importers on the UK scheme and helps suppliers build the verified emissions data that beats the defaults; contact us to put real numbers in your 2027 budget.

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