The government is looking at the possibility of introducing levies on imported carbon-intensive goods from countries with weaker climate regulations, as a think tank labels the move a “betrayal of taxpayers.”
The move is intended to address ‘carbon leakage’ concerns and protect vulnerable home industries like British steel.
The measures, mirroring the EU’s Carbon Border Adjustment Mechanism (CBAM), emphasise the government’s commitment to aligning with global climate strategies.
Conversations around the bid to prevent the UK from becoming a dumping ground for high-emission, low-cost products come after extra emphasis has been placed in recent weeks on making the UK steel industry “carbon neutral.”
CBAM is a key component of the European Green Deal, aiming to combat carbon leakage by imposing a carbon tariff on certain imported goods such as aluminium, cement, iron and steel, electricity, hydrogen, and fertilisers.
A ‘Betrayal Of Voters’
However, the move has drawn criticism from some quarters, with the Institute for Economic Affairs (IEA) energy analyst Andy Mayer, arguing that equivalent UK legislation would constitute a “betrayal of voters.”
He said: “Without the CBAM, British industry can compete with the EU to attract investment in industries that are reliant on high carbon products in their supply chains. This includes turbine towers, nuclear reactor casings, pipes for carbon capture, and the majority of construction products in eco-homes.
“With the CBAM, we are taking rates from the EU geared to the interests of non-UK firms, without giving them a say. This is a betrayal of voters, particularly in the manufacturing red wall, whose jobs will be at risk as a result of the higher costs.”
With some reports that the legislation could be in the Autumn Statement, sources familiar with the negotiations told The Epoch Times that a move from Chancellor Jeremy Hunt may be delayed to the Spring budget, due to ongoing discussions.
A spokesperson for HM Treasury told The Epoch Times, “The government has consulted on a range of potential policy measures to mitigate future carbon leakage risk, and will announce next steps in due course,“ adding, ”We do not comment on speculation ahead of fiscal events.”
The proposal has received approval from some experts, with David Henig, director of the UK Trade Policy Project at the European Centre for International Political Economy, welcoming the potential move.
An ‘Overdue’ But ‘Welcome’ Move
Speaking via email, Mr. Henig suggested the move to replicate the EU model may be “overdue.”He said, “This step is overdue; however, while the government has been delaying making a decision for fear of being seen to align with the EU, business has faced more uncertainty.
“For the good of the environment and of trade, we need greater alignment with the EU where beneficial, as on carbon border adjustment.”
The news comes after reports that the government is looking to regulate less on the use of fossil fuels at home, instead seeking new ways to manage carbon capture.
Gareth Stace, director-general of trade body UK Steel, emphasised the urgency of such measures, stating, “As the UK steel industry is transiting to green steel production, it is essential that it is not continually outcompeted by high-emission, imported steel.”
The debate over the economic strength of the proposal is divided, with Mr. Mayer telling The Epoch Times: “Carbon Border taxes are a mistake. They are a tax on your own citizens and industries, in order to protect a minority of zombie firms from fair competition.
“They will drive up the cost of everything, for the benefit of postponing job losses for a few.
Jobs To Be Lost As Starmer Champions Green Steel
Meanwhile, the largest steelworks in Britain is anticipated to cut around 3,000 jobs, as it seeks to decarbonize its operations.Tata Steel, which employs 8,000 individuals across the UK, is poised to shift its operations from traditional blast furnaces to greener technology at its Port Talbot mill.
This strategic move, part of the company’s ambitious £1.25 billion proposal for decarbonization, is expected to see the loss of up to three-quarters of all jobs at the plant.
Last month, Labour leader Sir Keir Starmer advocated for a green transition within the steel industry. His visit to the Port Talbot plant, located in South Wales, was aimed to emphasise the historical importance of British steel.
During his visit, Sir Keir unveiled the Green Prosperity Plan, a decade-long investment initiative aimed at fostering clean steel production in the struggling industry.
Government To Tackle Emissions Rather Than Fossil Fuels
The UK’s net zero minister, Graham Stuart, recently highlighted the government’s commitment to tackling carbon emissions rather than fossil fuels themselves.During an Environmental Audit Committee session last Wednesday, Mr. Stuart emphasised, “What you’ve got to remember here is that there is nothing fundamentally wrong with oil and gas, it is the emissions from that which are the critical point.”
Last week, Prime Minister Rishi Sunak stressed the significance of domestic energy in the transition to net zero, stating, “Domestic energy will play a crucial role in the transition to net zero, supporting jobs and economic growth.”
As the UK gears up for COP28 at the end of the month, discussions on climate policies and global cooperation will likely cast a long shadow over the steel industry’s future.
