CBAM and UK Steel and Aluminium Exporters: Carbon Reporting Requirements and Competitive Position

UK Steel and Aluminium Exports to the EU: The Scale of Exposure#

The UK is a significant exporter of steel products and aluminium to EU member states. Prior to Brexit, trade flows were seamless; post-Brexit, they cross a customs border and are therefore subject to CBAM from 2026. The UK exported approximately £2.2 billion of metals and metal products to the EU in 2023, with steel semi-finished products and aluminium among the largest categories by value. For EU importers of UK steel or aluminium, CBAM will add a certificate cost linked to the embedded carbon of the UK production process — and the magnitude of that cost depends on how carbon-intensive UK production is relative to competing suppliers from, for example, Turkey, India, or North Africa.

What Carbon Footprint Data UK Exporters Must Provide#

For EU importers to submit accurate CBAM reports and declarations, they need embedded emissions data from their UK suppliers. This means UK steel and aluminium producers must be able to calculate and communicate, per tonne of product: direct scope 1 emissions from their production process (furnace fuel, process gases), indirect scope 2 emissions from purchased electricity (using either the UK grid emission factor or the actual electricity supply emission factor), and the total embedded CO₂e per tonne of product for the specific product type being shipped. The calculation methodology is prescribed in Commission Implementing Regulation 2023/1773. UK producers who cannot provide this data leave EU buyers with no option but to use default values — which are set at the 90th percentile of global emissions intensity, almost certainly far higher than actual UK production emissions, making UK exports appear less competitive than they are.

The UK ETS and CBAM Deduction: An Unresolved Question#

The UK has operated its own Emissions Trading System (UK ETS) since January 2021, with a carbon price that has generally tracked below but correlated with the EU ETS. In 2024, UK ETS prices averaged approximately £30-45 per tonne, compared to EU ETS prices of €60-65. If the carbon price paid by UK steel producers under the UK ETS can be deducted from the CBAM obligation of EU importers, this would reduce CBAM costs for UK-origin steel. However, as of early 2025, the EU had not confirmed whether the UK ETS qualifies for CBAM deduction. The CBAM regulation states that deductions apply for carbon prices paid in third countries, and the EU is reviewing third-country schemes. A positive determination for the UK ETS would be significant — reducing CBAM costs and improving UK export competitiveness.

Competitive Position: UK vs Other Major Steel Exporters#

CBAM will affect different steel-exporting countries differently depending on their production emission intensity and the existence of domestic carbon pricing. Turkish steel, a major EU import, is produced with a mix of electric arc furnace (lower carbon) and blast furnace routes, and Turkey has announced plans for its own carbon market. Indian steel production is predominantly blast furnace with high embedded emissions, and India has no broad carbon pricing mechanism yet — meaning Indian steel will face higher CBAM costs without deduction. Chinese steel has the world's largest carbon output but the domestic ETS coverage is still expanding. UK electric arc furnace producers (like Liberty Steel's EAF operations) have among the lowest emission intensities globally — well below the default values — giving them a potential competitive advantage once actual emissions data is reported.

What UK Exporters Should Do Now#

UK steel and aluminium exporters to the EU have a clear interest in proactive CBAM preparation. The priority actions are: calculate your actual embedded emissions per tonne of product using the Commission Implementing Regulation 2023/1773 methodology; share this data with your EU customers so they can file accurate CBAM transitional reports and avoid defaulting to conservative default values; engage with UK government representations on UK ETS recognition under CBAM; and monitor EU CBAM developments via the CBAM registry and Commission guidance. AskBiz tracks UK ETS prices, EU ETS prices, CBAM regulatory updates, and the status of third-country carbon price recognition so UK exporters have current intelligence on their CBAM exposure.

• UK steel and aluminium exporters to EU markets face CBAM obligations from January 2026.
• Their embedded carbon footprint will determine the CBAM cost borne by EU importers — directly affecting the competitiveness of UK exports versus competitors.
• The UK operates its own ETS, which may qualify for CBAM deductions, but the UK-EU ETS linking discussion is incomplete.