The growing adoption of carbon pricing mechanisms is transforming international trade and raising demands on companies exporting to markets with stricter climate policies. In this context, o Carbon Border Adjustment Mechanism (CBAM) has become one of the main instruments for reducing so-called carbon leakage — when companies move their production to countries with less restrictive environmental rules.
After the implementation of CBAM by the European Union, the UK announced that it will adopt its own mechanism from January 1, 2027. Although both have the same objective, the British model will not be a simple reproduction of the European one. Brazilian companies that sell products to these markets will need to understand the particularities of each system to ensure compliance and avoid financial impacts.
Why the UK created its own CBAM?
Since leaving the European Union, the United Kingdom began to develop its own climate policy, including the UK Emissions Trading Scheme (UK ETS). To complement this system and protect the competitiveness of national industry, the British government decided to implement a border carbon adjustment mechanism similar to the European one, but adapted to your own legislation and tax structure.
Therefore, This means that companies that export to both the European Union and the United Kingdom must comply with two different mechanisms, each with its own calculation rules, reporting and supervision.
What are the main differences?
One of the first differences is in the scope of products covered. Both mechanisms include carbon-intensive sectors, like aluminum, cement, fertilizers, hydrogen and iron and steel. Nonetheless, the European Union also applies CBAM to electricity imports, while this sector is not part of the British version in its initial phase.
Another important difference concerns the emissions considered. The European model already requires, for certain products, accounting for both direct and indirect emissions. The UK CBAM will initially be implemented considering only direct emissions, leaving the inclusion of indirect emissions for a future stage, scheduled to take place from 2029.
The billing method also changes between the two systems. In the European Union, importers must acquire and deliver CBAM certificates corresponding to the emissions incorporated into imported products. Not UK, on the other hand, the obligation will act as a tax, collected directly from the UK tax authority (HMRC), eliminating the need to purchase certificates.
Operational requirements also differ. The European CBAM uses a limit based on the quantity of imported products, while the United Kingdom will adopt a criterion based on the customs value of imports. Furthermore, The reporting schedules, emissions verification processes and inspection mechanisms are not identical, requiring companies to maintain specific controls for each market.
What changes for Brazilian exporters?
For Brazilian companies, These differences mean that meeting European CBAM requirements does not automatically guarantee compliance with the British model. Exporters operating in both markets will need to separately evaluate the products covered, the necessary emissions data, the framework criteria and reporting obligations.
This scenario reinforces the importance of structured management of greenhouse gas emissions, the traceability of information throughout the production chain and constant monitoring of regulatory updates. Thus, the sooner companies prepare, the risks of additional costs will be lower, inconsistencies in reporting and difficulties in accessing markets increasingly driven by decarbonization.
How biO3 can support your company
Adapting to new climate requirements goes beyond regulatory compliance and can represent a competitive advantage for companies involved in international trade. Thus, biO3 supports organizations in preparing greenhouse gas inventories, carbon footprint calculation, developing decarbonization strategies and preparing to meet the requirements of mechanisms such as the European Union's CBAM and the future UK CBAM, contributing to safer operations aligned with the demands of global markets.
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