Currently, only California applies a BCA for electricity, while the European Union and the United Kingdom will apply BCAs from 2026 and 2027, respectively. Several other countries and territories with emissions pricing are considering them.[3]
The United Kingdom Carbon Border Adjustment Mechanism (UK CBAM) is a carbon tariff on imports of certain goods produced with high carbon emission into the United Kingdom,[16] similar to the European Union's CBAM.[17] It will cover slightly different goods, and is scheduled to launch on 1 January 2027.[18][19] The sectors within scope are aluminium, cement, ceramics, fertiliser,[20] glass, hydrogen, iron and steel.[21][22] There are some differences regarding the type of emissions covered. Both EU and UK CBAM cover direct ('Scope 1') emissions. Regarding indirect ('Scope 2') emissions, the EU covers only emissions from electricity consumed during the production process. The UK CBAM proposals cover more indirect emissions, namely from heat, steam and cooling, on top of electricity.[23][24]
California
The California Cap-and-Trade Program has a carbon border adjustment mechanism for imported electricity since 2011,[25] and is required to report to the Legislature in 2025 on a potential extension of border adjustment to physical products.[26]
WTO rule compatibility
Current WTO rules may prohibit some types of carbon border adjustment. In 2024, the United States Democrats (then in government) stated that carbon border adjustment does not amount to a carbon tax but instead to a fee that is permissible under World Trade Organization(WTO) rules,.[27] The WTO itself has not come to a conclusion.[28]