The UK has today unveiled plans for a carbon pricing mechanism on imports set to be implemented by 2027.
The mechanism targets key sectors, including iron, steel, aluminium, ceramics and cement -imposing a carbon price comparable to that faced by domestically produced goods.
This move aims to address the risk of ‘carbon leakage,’ where production and emissions are shifted to countries with lower or no carbon pricing, undermining global efforts toward net zero.
The government’s response to carbon leakage concerns includes additional measures, such as working with industries to establish voluntary product standards and collaborating with stakeholders on proposed changes to the UK Emissions Trading Scheme.
Further consultations on the carbon border adjustment mechanism (CBAM) are slated for 2024, with a focus on engaging trade partners and affected entities to minimize trade impacts.
Chancellor of the Exchequer Jeremy Hunt said: “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 decarbonisation efforts translate into reductions in global emissions.
“This should give UK industry the confidence to invest in decarbonisation as the world transitions to net zero.”
