CPA says carbon border mechanism unlikely to stop carbon leakage and off-shoring

The Construction Plant-hire Association (CPA) has published a consultation response arguing that the UK's Carbon Border Adjustment Mechanism is unlikely to stop carbon leakage, even though it will make imported goods more expensive.

The trade body said that, while the mechanism would push up the price of imports, those goods would keep many of their cost advantages over domestic production. On that basis, the CPA said, the measure is unlikely to address the risk of carbon leakage and off-shoring.

The CPA described the consultation as being about applying a charge to certain imported goods. HM Revenue & Customs (HMRC) describes the mechanism as placing a carbon price on the embodied emissions of goods brought into the UK.

The mechanism

According to HMRC, the Carbon Border Adjustment Mechanism (CBAM) will start on 1 January 2027. The government's stated aim is that UK decarbonisation leads to a true reduction in global emissions rather than displacing carbon emissions overseas.

Primary legislation for the charge is contained in the Finance Act 2026, HMRC said. Secondary legislation was laid on 13 July 2026, with further regulations laid on 9 September 2026.

The consultations

HMRC published draft CBAM regulations for technical consultation on 10 February 2026, with responses due by 24 March 2026. The consultation was aimed at UK importers of goods in the aluminium, cement, fertilisers, hydrogen, and iron and steel sectors, and at downstream producers using those goods in their supply chains.

A second set of draft legislation followed on 9 April 2026 for a six-week technical consultation, which closed on 21 May 2026.

HMRC said it is analysing the feedback from the February to March consultation and has not yet published an outcome.

What happens next

The CPA's full argument is set out in the response document it has published on its website.

HMRC said the charge will start on 1 January 2027.