High-carbon commodities imported in UK should face new tariffs

LONDON, (Parliament Politics Magazine)  – An influential committee of MPs has recommended that high-carbon commodities imported into the UK be subject to new tariffs to guarantee that other nations meet their obligations to achieve net zero greenhouse gas emissions in the same time frame as the UK.

According to the MPs, a carbon border adjustment mechanism (CBAM) would penalise corporations and nations that try to avoid taking responsibility for reducing emissions while also providing an incentive for specific economic sectors to shift away from ecologically harmful practices.

The committee’s Tory chair, Philip Dunne, stated that such a move was required to reach net zero: Now that the targets, timeframes, and general strategy for achieving net zero had been established, the work must move at a faster pace to make the ambitions a reality.

Moving to the cleaner manufacturing methods required to reduce the UK’s emissions in line with the 2050 net zero objective may incur short-term expenses in new equipment and procedures for some industries, such as steelmaking.

However, if competitors in other nations do not take similar actions and continue to use fossil fuels and emit high levels of carbon, their products may be cheaper and undercut British industry, putting British industry at a significant disadvantage.

Carbon leakage occurs when greener industries in the domestic market lose out and the carbon is instead emitted offshore.

A CBAM could level the playing field by imposing tariffs or taxes on such products’ imports, and it has widespread support among economists, as long as it can be used to target specific products and practises rather than being used as a protectionist measure to keep goods from developing countries out.

MPs on the environmental audit committee urged ministers to move independently in enacting such a tax. CBAMs are being considered by the EU, and the US government has indicated that such measures may be considered in the future.

CBAMs are being avoided by the Treasury because they could raise the price of some commodities at a time when consumers are already experiencing a cost-of-living problem. There are also concerns in government that enacting a CBAM now will jeopardise ministers’ efforts to negotiate post-Brexit trade arrangements throughout the world.

However, Dunne stated that the MPs had carefully considered these issues. Their  committee had determined that the benefits of a CBAM exceeded the disadvantages, he stated. For far too long, the consumption-related emissions have been effectively ‘offshored,’ placing the problem out of sight and out of mind. However, they must all bear a bigger share of responsibility for their consumption as well as the behaviours that their businesses and organisations embraced.

After hosting the Cop26 climate summit in Glasgow last November, the UK is president of the UN climate discussions for the rest of this year. As a result, the government is in a strong position to pioneer CBAMs, which have been proposed for years but have yet to be implemented.

The committee was under no illusions that it would be a tough policy to get right, with an obvious advantage to acting multilaterally with other trading partners, Dunne said. As a result, all businesses must have a voice in the negotiations, and the government must be honest with its intentions.

The UK was leading the way on the transition to net zero emissions, had decreased emissions faster than any other G20 country, and continued to have the most ambitious climate ambitions for 2030, a Treasury spokesperson said.

As they moved closer to net zero, they recognised the need of continuing to address the risk of carbon leakage in order to avoid jeopardising its ambitious decarbonisation goal.

That was a worldwide issue, which was why they were collaborating with international partners to address it and other climate concerns, as well as looking into local options.