Plans will see imported products such as iron, steel, aluminium, ceramics and cement face a comparable carbon price to those manufactured in the UK.
Britain is set to charge a carbon levy on imported goods under plans announced by the Treasury to help prevent UK firms being undercut by overseas manufacturers.
The Treasury said the proposed new tax will come into effect in 2027, ensuring that imports of products such as iron, steel, aluminium, ceramics and cement from overseas will face a comparable so-called carbon price to those manufactured in Britain.
A carbon price is used by governments to help reduce emissions by charging a fee on carbon pollution to encourage industries to cut their greenhouse gases.
There have been mounting calls for the UK Government to tackle “carbon leakage” over concerns that UK companies are being undercut by cheaper, but higher carbon, imports from countries where they charge a lower or no carbon price.
The Treasury said the plans will help level the playing field and boost UK industry investment in cutting greenhouse gas emissions.
Chancellor Jeremy Hunt said: “This levy will make sure carbon intensive products from overseas – like steel and ceramics – face a comparable carbon price to those produced in the UK, so that our decarbonisation efforts translate into reductions in global emissions.
“This should give UK industry the confidence to invest in decarbonisation as the world transitions to net zero.”
The Treasury said charges under the planned new carbon border adjustment mechanism (CBAM) would depend on the amount of carbon being emitted in the manufacture of the imported product, as well as the gap between the carbon price applied in the country where it is produced and that paid by equivalent UK manufacturers.
It follows a consultation on carbon leakage solutions, which found that 85% of those who responded believed the issue is a current or future risk to their decarbonisation efforts, according to the Treasury.
The Treasury will now consult on the levy plans in 2024, including its design and delivery, as well as the exact list of goods and products that will be covered.
