Starting in 2027, Britain will implement a carbon import levy, known as the carbon border adjustment mechanism (CBAM), to safeguard businesses against cheaper imports from countries with less stringent climate policies, as reported by Reuters on December 18. This measure will be applicable to carbon-intensive products in sectors like iron, steel, aluminium, fertiliser, hydrogen, ceramics, glass, and cement. The levy’s calculation will consider the carbon emissions associated with the production of the imported goods, as well as the disparity between the carbon prices in the country of origin and those faced by UK producers. The objective is to establish a level playing field, ensuring that carbon-intensive products from abroad face a comparable carbon price to those produced domestically. This move aligns with Britain’s commitment to achieving net-zero emissions by 2050 and aims to prevent carbon leakage, thereby contributing to global emissions reduction.

The carbon import levy addresses concerns within the UK’s steel industry, which anticipates the need for a domestic measure to counter potential influxes of high-emission products once the European Union (EU) implements its carbon tariff. The EU introduced a system in September to impose CO2 emissions tariffs on imported steel, cement, and other goods, with actual charges at the border starting in 2026. The UK’s steel industry supports the domestic carbon border policy, emphasizing the importance of preventing carbon-intensive products from flooding the market. However, there are concerns about the timing, as the UK’s CBAM is set to be implemented a year after the EU’s, raising apprehensions within the industry.

Sources:

https://www.reuters.com/world/uk/uk-government-implement-carbon-levy-by-2027-2023-12-18/