REA Draft Response to the Introduction of a UK Carbon Border Adjustment Mechanism from January 2017 Consultation

Following member feedback, the REA has drafted a response to the Introduction of a UK Carbon Border Adjustment Mechanism from January 2027 Consultation.

The consultation sets out proposals for the introduction of a carbon levy on certain imports within energy intensive industry sectors from January 2027, with the aim of protecting UK businesses from cheaper imports from countries with less stringent climate regulations and mitigating carbon leakage.

The planned Carbon Border Adjustment Mechanism (CBAM) will apply to imports of carbon-intensive products placed for use on the UK market. This includes aluminium, cement, ceramics, fertilisers, glass, hydrogen, iron/ steel.

Within our response the REA:

  • Support the introduction of the CBAM, its proposed rate calculation and the acknowledgment that the UK CBAM rate should be comparable to the carbon price faced in the UK by domestic producers, after accounting for adjustments, exemptions or compensation schemes.
  • Support the list of commodity codes laid out by the Government, in each of the seven proposed sectors, yet call for further clarification as to why certain products including bio-methane, and electricity as a finished good have been omitted.
  • Call for more thought to be given on how the introduction of the CBAM will interact with UK-based manufacturing and production, including the impact on sectors outside of the scopes listed, the use of default values, and the effect on the imports of finished products versus British-manufactured finished products.
  • Call for the introduction of a ‘grace period’ for industry.
  • Support the minimum threshold in relation to the total value of a person’s CBAM goods being set at £10,000.
  • Call for greater clarity and alignment surrounding the terms ‘direct’ and ‘indirect’ emissions for all emissions-based policy and reporting.

You can read our draft here.

Please send any comments to [email protected] by Thursday 13th June, for incorporation into our final submission.