How is flagship climate policy shaping UK construction?

CBAM serves multiple objectives, each supporting the broader EU climate strategy:  

• Preventing carbon leakages: Discouraging industries from relocating their manufacturing operations abroad to avoid UK emissions pricing rules by applying a similar carbon cost to imported goods.  
• Levelling the competitive playing field:  CBAM ensures that importers of carbon-intensive products are subject to a comparable carbon cost to the EU’s Emissions Trading System. 
• Encouraging global emissions reduction: International producers have incentives to decarbonise their processes, extending EU’s climate influence globally.    
• Strengthening transparency and accountability: CBAM mandates the detailed reporting of embedded emissions, making sure that carbon footprints throughout global supply chains are accurately measured, verified and shared.  

However, organisations must start preparing now for its impact on project viability, risk allocation and reporting requirements. 

UK’s adoption of CBAM   

The UK is due to introduce its own version of CBAM on 1 January 2027, following the EU’s implementation in January 2026. While the systems are similar, there are a few key differences. The UK CBAM will be a tax-based mechanism based on the quarterly UK Emissions Trading Scheme (ETS) price in the prior quarter. The UK will also only cover direct emissions when it launches in 2027, with the inclusion of indirect emissions being delayed until 2029 at the earliest.  

Navigating CBAM to ensure greater viability  

Major policy changes can have a significant impact on construction projects, particularly when considered alongside the market pressures and constraints.CBAM has the potential to add both direct and indirect cost pressures:  

Material prices

Imported cement, steel and aluminium outside the carbon border will face carbon price adjustments. This may shift procurement to UK materials covered by the UK ETS and boost demand for low-carbon options, potentially causing supply shortages and higher costs if demand exceeds supply.  

Working with established supply chains collaboratively and transparently means that value can be extracted with minimum cost. 

Reporting obligations 

Exporters must measure and disclose UK emissions trading from manufacturing. Importers must report embedded emissions for goods entering the UK annually in 2027, then quarterly from 2028.  

This increases cost and administrative work, especially if suppliers lack emissions-tracking. To manage this effectively, procurement teams should be knowledgeable, adaptable and offer comprehensive guidance on cost, programmeand risk. 

Impact on bidding 

Imported steel or cement will cost more, impacting bids. Suppliers must demonstrate emissions transparency in their supply chains. This may even become a procurement requirement written into contracts raising risk and costs. However, companies with well-established procurement routes with transparent reporting will be less affected than those unprepared for carbon accounting.  

The need to meet CBAM requirements will likely be included in contracts. It represents a risk, and developers and contractors must agree on who is liable for the fluctuation in cost. The appetite for risk along with the market conditions and existing supply chains will inform different approaches and attract differing levels of cost. 

Data verification as new standard 

If UK emissions trading data cannot be verified or actual emissions data cannot be obtained, importers must show evidence of the efforts they have made to try to acquire it from their suppliers. This includes outreach, documentation requests and attempts to validate information.  

“This prevents companies from simply defaulting to non-specific data but adds administration work.”   

This aligns with the EU’s approach which limits default values for reporting, moving toward country-specific defaults and prioritising actual emissions data.  

As CBAM rules tighten, real emissions data from suppliers will become essential and standard. Navigating this complexity can be minimised by setting clear expectations from the start so that neither time nor cost is borne by either side, going down the wrong procurement routes. 

More than just a tariff   

CBAM marks a key shift in global climate governance, making low-carbon materials and transparent reporting essential for the construction industry. As CBAM becomes fully implemented, companies will need to reassess supply chains and enhance emissions reporting. They must also choose suppliers who can meet the new carbon data standards.  

Those that are early to adapt will be best placed to succeed in a global market that increasingly values lower carbon emissions.