New inquiry weighs up carbon border tax measures


A new inquiry into carbon border adjustment mechanisms (CBAMs) has been announced by the Environmental Audit Committee.

If adopted by the UK Government in the future, according to the Committee, a CBAM could crack down on the carbon footprint of many imported goods and address carbon leakage.

The new inquiry will look at the role CBAMs could play in preventing carbon leakage and meeting the UK’s environmental objectives, while considering the wider impacts, risks and opportunities of the UK Government introducing its own unilateral CBAM.

Environmental Audit Committee Chairman, Philip Dunne MP, commented on the launch: “As the UK continues to bear down on carbon emissions, we should not inadvertently increase carbon leakage – the risk of companies moving operations abroad to avoid their environmental responsibilities.

“This could present a glaring loophole for Net Zero Britain, through which many highly skilled jobs might be lost, damaging local economies.

“We are at a pivotal time: the Government appears to be in listening mode on the merits of CBAMs, and we hope our new inquiry will shed light on the pros and cons of such a complex policy move.

“We are inviting written evidence submissions to guide our inquiry and would encourage anyone concerned about these issues to consider making a contribution.”

The inquiry follows recommendations on CBAM made by the EAC in February 2021 as part of its ‘Growing Back Better: Putting Nature and Net Zero at the Heart of the Economic Recovery’ report.

In that report, the EAC said the Government should investigate the merits of a CBAM, alongside parallel measures ensuring that such policy would not see an adverse impact on developing countries.

During the inquiry, MPs expect to explore the practical challenges around determining which sectors or products might be covered by CBAM, and the potential administrative burden on small businesses of calculating carbon emissions in the production of imported goods.

The Committee is inviting written submissions as part of this inquiry by 25th October.

More information about the ‘Carbon border adjustment mechanism’-inquiry and how to take part is available on the UK Parliament website.