Imported raw materials such as steel and cement will face a new carbon tax from 2027 under UK plans designed to support domestic producers and cut emissions, but the government faces criticism for not moving fast enough.
The Treasury said the tax would help address the phenomenon of “carbon leakage”, in which British manufacturers are undercut by foreign competitors whose governments do not levy on businesses that emit a lot of carbon.
The result is that emissions are simply transferred to other countries, while greener British producers lose because they have to pay carbon-related charges.
The chancellor, Jeremy Hunt, said: “This levy will ensure that carbon-intensive products from overseas – such as 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 moves to net zero.”
The Treasury said charges under the Carbon Border Adjustment Mechanism (CBAM) would depend on the amount of emissions in the manufacture of the imported product, as well as the gap between the carbon price applied in the country where it is produced and that paid by equivalent. British manufacturers.
Industry groups welcomed the plan but warned that the proposed start date of 2027 was too late.
Trade body UK Steel has pointed out that a similar mechanism will be introduced by the EU in 2026, meaning high carbon steel can be dumped from countries like China on the UK market for a year, until the CBAM is in force.
“With over 90% of global steel production facing no carbon cost, it is only right that a new carbon cap policy is introduced to create a level playing field on carbon pricing,” said UK Steel Director General, Gareth Stace, said.
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“However, the implementation of the UK scheme one year after the EU started CBAM is extremely worrying.
“Despite steel sector officials repeatedly warning how exposed the UK would be if it did not mirror the EU implementation timetable, the government today appears to be actively planning for just that scenario.”
