Confirmation of the consultation was made today (21 June) in the Government’s official response to a report first published by the Environmental Audit Committee (EAC) of MPs from all parties in April. This EAC report recommended that the UK government work “immediately” to develop and launch a unilateral Carbon Border Adjustment Mechanism (CBAM).
CBAMs require private and public sector organizations to pay for the carbon generated when manufacturing products, at or above the level they would have if they were producing the goods in the UK. CBAMs are often touted as a way to prevent companies from “offshoring” their shows.
Without CBAM, the UK signed a number of notable post-Brexit trade deals with major emitters, including Australia. The EAC warned that this could set a bad precedent for the environmental impact of future agreements. His report also pointed out that the UK as the host of COP26, which it officially occupies until the start of COP27 in Egypt in November, means that other countries will look to the UK for leadership in sustainable international business approaches.
The government’s response to the EAC report confirms that a consultation on proposals for a national, unilateral CBAM will be launched later this year. The response indicates the UK’s desire to work with less wealthy countries to ensure that in addition to imposing CBAM, it will provide practical support for decarbonisation and compliance.
EAC Chairman Philip Dunne MP welcomed the government’s response and urged ministers to use the results of the forthcoming consultation to launch a CBAM “as soon as possible” – certainly by the end of the decade.
Dunne added: “It is absolutely essential for the success of any resulting policy decision that it enjoys support across the economy and in no way harms the consumer, particularly in a time of rising cost of living, which affects us all.
“The Committee looks forward to continuing a constructive dialogue with Ministers on this crucial policy area. We want to level the playing field for domestic manufacturers who already contribute to the UK emissions trading scheme. »
While the response was welcomed, it should be noted that the UK government has reportedly yet to implement a key change it promised following an earlier EAC report. Environment Secretary George Eustice and Lord Zac Goldsmith, speaking at an EAC hearing on Monday June 20, said they were unaware work had begun to assess the environmental impacts of the existing free trade agreements and to ensure that this assessment is applied before the agreements. will be finalized in the future. This work was promised by the government in February.
CBAM EU
The government’s response to this latest EAC report says UK ministers are actively working to “establish a full understanding” of the EU’s proposal for its own multilateral CBAM.
The EU reached agreement on its own CBAM in March and pledged to bring the mechanism into force from 2026. EAC MEPs then expressed concern that ministers would not agree to it. did not thoroughly examine the implications for UK trade relations with EU countries. and in particular Ireland and Northern Ireland.
Over the past three months, the EU has faced a series of delays in its efforts to update its internal emissions trading system (ETS) and its plans for the CBAM. A deal was finally struck last week, with the full introduction of CBAM potentially delayed until 2033. Click here for a full explainer from edie’s content partner, Euractiv.
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