Carbon tax on imported goods needed to stop ‘offshoring’ emissions, MPs say

The government has been urged to create a “carbon border” that will see additional taxes imposed on imported goods based on their carbon emissions.

MPs on the Commons Environmental Audit Committee (CEAM) called for the tax as a way to stop domestic firms from “offshoring” their emissions. Taxes are currently imposed on carbon emissions from UK-made products.

In a report, the MPs said that putting a price on imported carbon can incentivise sectors to move away from carbon-intensive practices and promote behavioural changes towards the creation of more low-carbon products.

Currently, the UK’s emissions figures do not include carbon from imports, which understates the true picture of the carbon associated with UK consumption.

CEAM acknowledged that the extra charges could be passed onto consumers without greater incentivisation for the development of more low-carbon products to ensure people are not adversely affected by higher prices.

It added that that some sectors are hard to decarbonise and will need greater support. “A one-size fits all approach is unlikely to suffice,” it said.

A global approach to reducing carbon in collaboration with other countries would be most effective as a domestic policy is “unlikely to drive significant change to reduce global emissions”.

The report suggested that the UK is in a strong position to lead efforts on such proposals while it holds the presidency of COP and is engaging in trade discussions with many countries following the UK’s exit from the EU.

Philip Dunne MP, Environmental Audit Committee chairman, said: “The targets, timetable and overall strategy for meeting net zero have been set: now the work must speed up to make the ambitions a reality. A carbon border adjustment mechanism (CBAM) can drive change not only by addressing carbon leakage, but by driving low-carbon change across our economy.

“Our Committee is under no illusions that this will be a challenging policy to get right, with a clear advantage to moving multilaterally with other trading partners, and therefore all businesses must have a voice in the discussions and the government must be upfront with its intentions.

“Our Committee is clear that the pros of a CBAM outweigh the cons. For too long the emissions from our consumption have effectively been ‘offshored’, leaving the problem as out of sight and out of mind, but we must all take greater responsibility for our consumption and the practices that our businesses and organisations adopt.

“I look forward to the government’s response to our Committee’s latest report and to a statement of its intentions on carbon pricing.”

A study from last year found that carbon pricing has been a less effective driver in helping to tackle climate change and drive technological innovation than governments might have hoped.

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