UK Government confirms it will consult on domestic CBAM to address carbon leakage
The Government has responded positively to the Environmental Audit Committee’s report on carbon border adjustment mechanisms (CBAMs), committing to consult on proposals around implementing a domestic CBAM to address carbon leakage.
The Government has responded positively to the Environmental Audit Committee’s report on carbon border adjustment mechanisms (CBAMs), committing to consult on proposals around implementing a domestic CBAM to address carbon leakage.
Following the Committee’s report Greening imports: a UK carbon border approach, published on 4 April, the Government confirmed in a written statement to Parliament on 16 May that it would consult on implementing a CBAM and product standards to address carbon leakage.
In its response to the Committee, published today, the Government also expresses its desire to work closely with low- and middle-income countries and to align any resulting policy around a CBAM or on product standards with the interests of consumers.
The Government has confirmed that it is engaging actively with the EU on the Commission’s proposal for an EU CBAM. In the response, Ministers have committed to “building a full understanding” of the implication of the EU’s mechanism on the UK’s trading relationship with the EU, including with respect to Northern Ireland.
In its report, EAC highlighted that a CBAM could incentivise the development of more low carbon products domestically as heavy emitting sectors look to avoid higher taxes that a CBAM or enhanced product standards would incur. It would further mitigate the potential for heavy emitters to ‘offshore’ their emissions and send a clear signal for companies to re-evaluate their carbon footprint. To get this policy right, the EAC called on the Government to consult with sectors across the economy and SMEs.
Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, said: "The Committee recommended that work on implementing a unilateral CBAM commence as soon as possible, to be prepared for roll out by the end of this decade, preferably multi-laterally or unilaterally. But this would only be the beginning: meaningful carbon reductions through this import tax would be significantly more successful if we joined a multilateral approach in the future. The US and the EU are already ahead of the curve in this regard."
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