Don’t Pay for Carbon Twice – How Solar Protects You from CBAM Costs

The rules of global trade are changing. Going forward, emissions will carry a price tag. The Carbon Border Adjustment Mechanism (CBAM) is the world’s first carbon border tax. Launched by the EU in 2023 and coming into force financially in 2026, with the UK following in 2027, it puts a cost on the carbon embedded in some imported goods.

At first, CBAM is only going to apply to the most carbon-intensive sectors: steel, iron, fertilisers, cement, aluminium, hydrogen and electricity. But the scope is expected to expand to other industries over time. For companies in the initial list, the impact is immediate. High-carbon production means higher costs to trade. Cleaner production protects your competitiveness.

In this blog, we’ll explain what CBAM is, who it affects and why it matters for UK businesses. Most importantly, we’ll show how investing in onsite solar is an intelligent way to cut emissions, reduce exposure to CBAM costs and safeguard your bottom line.

What CBAM means for UK businesses

CBAM exists to stop what’s known as “carbon leakage.” If Europe or the UK tighten their climate rules while other countries don’t, companies could be tempted to shift production abroad to cut costs. That would undermine domestic climate goals and penalise local industries that are working hard to decarbonise.

To prevent this, CBAM ensures imports carry the same carbon costs as goods produced under domestic emissions trading schemes.

For UK exporters to the EU, CBAM already means disclosing the embedded carbon in your goods. From 2026, those disclosures turn into real payments, as EU importers must buy certificates to cover those emissions.

For UK importers, the same rules apply from 2027 under the UK’s own CBAM. Even if your business isn’t directly covered, the ripple effects will be felt across supply chains as buyers demand low-carbon inputs and suppliers pass on compliance costs.

Who is most exposed?

The first wave of CBAM hits industries where energy use is highest and emissions are hardest to hide. Steel and iron, aluminium, cement, fertilisers, hydrogen and electricity are all in scope. For these sectors, competitiveness will depend as much on carbon as on cost.

Exporters with cleaner production have a clear advantage in EU markets, while those sticking with carbon-heavy energy will face rising charges. Other industries may be spared for now, but the trajectory is obvious. Once CBAM systems are in place, regulators can add sectors at pace. Businesses outside the initial list would be wise to act early rather than wait.

Why solar is the intelligent solution

For companies under pressure from CBAM, the challenge is to cut the carbon intensity of every product. Onsite solar is one of the most direct and effective ways to achieve this.

By generating clean power on your premises, you immediately lower your reliance on grid electricity, which carries a far higher carbon footprint. Every megawatt-hour of solar you generate reduces your Scope 2 emissions and shrinks the carbon embedded in your goods.

The benefits don’t stop at compliance. Solar reduces the number of CBAM certificates your customers need to buy, making your goods more competitive in EU markets. It provides verifiable generation data that strengthens your CBAM reporting, while also supporting compliance with wider frameworks like SECR, ESOS and Carbon Reduction Plans.

At the same time, you’re cutting your energy bills, improving your margins and demonstrating to investors and customers that you’re serious about net zero.

Carbon is now a cost. Solar is your shield.

CBAM is changing the rules of trade. If your business operates in steel, cement, aluminium, fertilisers, hydrogen or electricity, the clock is already ticking.

Relying on carbon-heavy grid power will put you at a disadvantage. Switching to solar reduces emissions, protects you from rising CBAM costs, and secures your competitiveness for the long term.

Talk to us today to find out how we can cut your carbon exposure and power your business ahead.