UK needs carbon import tax to meet emissions targets, say MPs

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The UK should draw up plans for a tax on carbon-intensive imports to protect domestic industry and reduce greenhouse gas emissions, MPs said on Monday.

A ‘Carbon Border Adjustment Mechanism’ (CBAM) would reduce the risk of companies relocating production to avoid the UK’s domestic carbon tax which is applied to certain polluting industries, according to a report by the UK’s environmental audit committee. Communal room.

It would also incentivize domestic and foreign industries to reduce emissions associated with their goods, which is key to meeting climate goals, the EAC said.

“Our committee is clear that the benefits of a CBAM outweigh the harms. For too long, our consumer emissions have effectively been ‘outsourced’, leaving the problem out of sight and out of mind,” said said committee chairman Philip Dunne.

Such a tax would bring about “a low-carbon shift in our economy”, although it “will be a difficult policy to put in place”, he added.

The UK has pledged to achieve net zero emissions by 2050, which will require reducing pollution from heating, buildings and transport and the energy sector.

Carbon pricing has attracted increasing attention over the past 18 months, and the EU plans to introduce the world’s first CBAM which will apply to certain products in sectors such as cement and aluminium.

The mechanism “will give us a tool to accelerate the decarbonisation of our industry, while protecting it from companies in countries with less ambitious climate objectives”, said Bruno Le Maire, French Minister of Economy, Finance and Recovery, in March.

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The bloc’s proposal provoked opposition last year from exporting countries, including Russia, who said it would hit their economies and warned the mechanism must not breach World Trade Organization rules.

In the UK, some polluting companies are required to buy carbon allowances under the national emissions trading scheme (ETS), which gives them permission to emit a tonne of greenhouse gas. tight. The EU has a parallel system, the EU ETS.

The price of credits traded in the two systems hit record highs this year, prompting industry complaints that they were struggling to manage rising carbon costs and were at a disadvantage to their country-based competitors. not subject to such tax.

The EAC said imported emissions were not included in the UK’s current carbon pricing system, despite accounting for almost half of the country’s overall ‘consumed’ carbon dioxide.

A CBAM should “ensure that an equivalent carbon price is applied to imports as it is applied to domestic production”, the committee said. He added that the government is expected to launch the new levy this decade, noting that the EU aims to have its system in place by 2023.

MPs also said the government should consult with businesses and other stakeholders to address concerns that the tax could be passed on to consumers, worsening the cost of living crisis. The EAC also urged ministers to think about how to use the money raised by a CBAM and what impact the mechanism could have on the most vulnerable.

The committee agreed that a multilateral carbon levy system would be more effective in reducing global emissions than action by the UK alone. But he said unilateral action could “boost cooperation on multilateral measures and incentivize countries to strengthen their own carbon pricing and decarbonization measures”.

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