The UK Government should develop plans for a carbon border
adjustment mechanism (CBAM) to address carbon leakage as the date
to achieve net zero emissions gets closer, the Environmental
Audit Committee says today.
Publishing its report examining the issue, MPs argue that a CBAM
could drive green policies in industries across the UK economy as
the practice of ‘offshoring’ the UK’s emissions is addressed.
Putting a price on imported carbon can incentivise sectors to
move away from carbon intensive practices and promote behaviour
change to more low-carbon products. Currently, the UK’s emissions
figures do not include carbon from imports, which understates the
true picture of the carbon associated with UK consumption. A CBAM
could help address this.
However, the Committee also heard concerns that carbon pricing
could lead to producers increasing the costs of high carbon
products on to the consumer, which could exacerbate the current
cost of living crisis. It is necessary, the Committee argues, for
the CBAM to incentivise the development of more low carbon
products to ensure people are not adversely affected. The
Government should also improve awareness raising around carbon
pricing and a CBAM, if introduced, to demystify the policy for
consumers.
The Committee recognises that sectors that are hard to
decarbonise will need greater support. It is therefore integral
that when designing a CBAM, that the Government consults sectors
across the economy and SMEs to ensure the approach works: a
one-size fits all approach is unlikely to suffice. The Committee
is of the view that a CBAM alone will not deliver the desired
results: complementary mechanisms such as standards, regulation
and support for low-carbon technologies are also needed.
The Committee is aware that a unilateral CBAM is unlikely to
drive significant change to reduce global emissions, with a
multilateral CBAM likely to be the preferred and more effective
option. However, work on a unilateral CBAM can be championed much
sooner by the Government, with a view to opening discussions on a
multilateral CBAM in the future. The UK is in a strong position
to lead efforts on CBAM development internationally, while
holding the presidency of COP and engaging in trade discussions
with many countries around the world as a strong trading partner.
Environmental Audit Committee Chairman, Rt Hon MP, said:
“The targets, timetable and overall strategy for meeting net zero
have been set: now the work must speed up to make the ambitions a
reality. A carbon border adjustment mechanism can drive change
not only by addressing carbon leakage, but by driving low-carbon
change across our economy. Our Committee is under no illusions
that this will be a challenging policy to get right, with a clear
advantage to moving multi-laterally with other trading partners,
and therefore all businesses must have a voice in the discussions
and the Government must be upfront with its intentions.
“Our Committee is clear that the pros of a CBAM outweigh the
cons. For too long the emissions from our consumption have
effectively been ‘offshored’, leaving the problem as out of sight
and out of mind. But we must all take greater responsibility for
our consumption, and the practices that our businesses and
organisations adopt.
“I look forward to the Government’s response to our Committee’s
latest report and to a statement of its intentions on carbon
pricing.”
