The British government yesterday said that it would implement a new import carbon pricing mechanism by 2027, with goods imported from countries with a lower or no carbon price having to pay a levy as part of decarbonization efforts.
The UK government said the carbon border adjustment mechanism (CBAM) would apply to carbon-intensive products in the iron, steel, aluminum, fertilizer, hydrogen, ceramics, glass and cement sectors.
The charge applied would depend on the amount of carbon emitted in the production of the imported good, and the gap between the carbon price applied in the country of origin — if any — and the carbon price faced by UK producers.
Photo: EPA-EFE, Adam Vaughan
“This levy will make sure carbon-intensive products from overseas — like steel and ceramics — face a comparable carbon price to those produced in the UK, so that our decarbonization efforts translate into reductions in global emissions,” British Chancellor of the Exchequer Jeremy Hunt said. “This should give UK industry the confidence to invest in decarbonization as the world transitions to net zero.”
The British government said it would help reduce the risk of “carbon leakage,” avoiding emissions being displaced to other countries due to them having a lower or no carbon price. The CBAM will work alongside the UK Emissions Trading Scheme, it added.
In September, the EU launched the first phase of a system to impose carbon dioxide emissions tariffs on imported steel, cement and other goods — the world’s first. It would not begin collecting any carbon dioxide emission charges at the border until 2026.
That planned tariff has caused disquiet among trading partners and at a recent forum, Chinse Special Envoy on Climate Change Xie Zhenhua (解振華) urged countries not to resort to unilateral measures such as the EU levy.
The UK Treasury said the design of its carbon border tax would be subject to further consultation next year, including the list of products in scope.
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