Eugene Heaney, Green Economy Business Development Manager
CBAM: What you should know and how it can give your business a competitive edge
This article was originally published in Plant & Civil Engineer magazine.
The Carbon Border Adjustment Mechanism (CBAM) is a new environmental policy introduced by the European Union (EU). It aims to put a fair price on the carbon emitted during the production of carbon-intensive goods that are entering the EU.
EU CBAM applies a carbon cost to imported goods, so that products made in countries, primarily outside the EU, with lower carbon pricing do not gain an unfair advantage over cleaner production. It is initially covering carbon-intensive sectors, such as cement, iron and steel, aluminium, fertilisers, electricity and hydrogen.
Its main purpose is to reduce “carbon leakage”, where production shifts from EU-based manufacturers to jurisdictions with weaker climate rules, and to accelerate low carbon production by making carbon costs more consistent across borders.
While CBAM is often viewed as a compliance issue, it also highlights that carbon performance is an important factor in business competitiveness.
For Northern Ireland manufacturers, this presents an opportunity.
Communicating carbon performance
In terms of trade relationships, CBAM legislation is already having an impact. For manufacturers, the ability to understand, measure and communicate carbon performance can be a competitive advantage, especially in an evolving regulatory landscape.
Even companies with products not directly covered by CBAM are finding that customers want greater visibility of emissions across their supply chains. Large manufacturers across Europe want to know the carbon footprint data from their suppliers for their own reporting obligations and decarbonisation targets.
Companies that can provide credible information on the carbon intensity of their products are likely to be better positioned when competing for contracts, participating in tenders and strengthening customer relationships.
Developing product-level emissions data and robust carbon reporting systems enables businesses to demonstrate the impact of these investments, which allows them to respond to customer requests and identify further opportunities for efficiency and cost savings.
Think of carbon transparency as a business asset. Businesses that can provide verified emissions data will be better positioned to showcase their competitive strengths and differentiate themselves in the marketplace.
Preparing for UK CBAM
While much attention has focused on the EU CBAM, businesses should also be aware of developments closer to home.
The UK Government's Carbon Border Adjustment Mechanism (UK CBAM) is due to come into effect on 1 January 2027. It will apply to embodied emissions in specified carbon-intensive goods imported into the UK, covering products from the aluminium, cement, fertiliser, hydrogen, iron and steel sectors.
Businesses importing affected goods will need to maintain relevant records and, depending on the scale of imports, may also be required to register under the scheme.
Here are three actions manufacturers can take now:
- Understand your exposure – review whether your products, imports, customers or suppliers are affected by EU CBAM or the upcoming UK CBAM.
- Strengthen your carbon data – start collecting product-level emissions information and engage suppliers to improve data quality and transparency.
- Use carbon data as a competitive advantage – demonstrate the value of investments in efficiency, innovation and decarbonisation when engaging with customers and bidding for new business.
Opportunities for Northern Ireland manufacturers
Northern Ireland’s strength in engineering, advanced manufacturing and construction means that businesses in these sectors have an opportunity to become a preferred supplier to EU markets.
Many of our local businesses already possess characteristics that align with the low-carbon transition, including efficient operations, innovative technologies and growing adoption of renewable energy.
Businesses that understand and explain their carbon performance clearly can use it to build stronger customer relationships, stand out from competitors and exploit new export opportunities. It can also help them respond to changes in supply chains, prepare for future low-carbon buying requirements and show the value of the sustainability investments they have already made.
This also creates opportunities beyond manufacturing. Demand is likely to grow for carbon measurement, reporting and verification support, particularly from businesses with expertise in digital technology, data, engineering and professional services. For exporters, clear carbon information could help them stand out with EU and UK customers, while Northern Ireland’s skills base and manufacturing reputation may also support future investment in lower-carbon production.
Support available
Invest Northern Ireland recognises that managing new legislation can be challenging, therefore we have developed free to use practical guidance and toolkit resources, which are available through nibusinessinfo.co.uk, including guidance on EU CBAM requirements and support to help businesses understand carbon reporting and emissions measurement. Businesses can also access information from the UK Government on the introduction of UK CBAM and future reporting requirements.
CBAM reflects a broader shift towards low-carbon competitiveness, where the ability to measure, manage and communicate emissions performance is becoming increasingly important.
Northern Ireland manufacturers have a strong track record of innovation, quality and resilience. Those same strengths can help our businesses secure a competitive edge as markets place greater emphasis on carbon performance.
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