The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026

Edward Argar Excerpts

Monday 12th October 2026 General Committees

[James Murray]

As I said earlier, that happens not only through the formal consultation, but through regular engagement with all sorts of industries affected by the introduction of the CBAM. We want to ensure that we develop the detail of the policy in the best possible way, particularly in relation to fertiliser. I understand that the hon. Gentleman raised that issue, as did a number of others.

A few hon. Members mentioned a figure of £70 per tonne of emissions in fertiliser. I do not recognise that figure at all. I confirm to the Committee that, as I have said, although fertiliser production is emissions-intensive, the effect of the carbon price paid by UK-based fertiliser manufacturers has been extremely low because of the allocation of free allowances to the sector. As a result, we expect initial liabilities to be very modest for imported fertilisers. I will publish illustrative rates very shortly.

Other hon. Members questioned the impact on businesses of the administrative burden of implementing the CBAM. I reassure the Committee that only those that import £50,000-worth or more of CBAM goods in a 12-month period will need to register for the UK CBAM. HMRC estimates that more than 80% of otherwise affected importers will be excluded from the CBAM altogether and that more than 99% of imported emissions will be covered. We believe that that gets the balance right between covering the relevant imports and minimising the administrative burden to those who could be affected.

[Edward Argar (Melton and Syston) (Con)]

I draw the attention of the Financial Secretary to paragraph 9.3 of the explanatory memorandum:

“There will be one-off costs to businesses to familiarise themselves with the requirements, train staff and set up new systems. There will also be a one-off cost associated with the time taken to register for CBAM where required. In addition, there will be ongoing costs to businesses to collate and report to HMRC information about the CBAM goods they have imported”.

What sort of quantum will those costs come out at? What assessment has the Financial Secretary made of what those costs will be for a business?

[James Murray]

I am happy to write to the right hon. Gentleman with any further information that might be available, in addition to what he referred to. However, the wider point, as I said in my opening remarks, is that this is about ensuring we address the risk of production with associated emissions simply moving overseas to jurisdictions with lower costs. The CBAM ensures that we prevent such carbon leakage, so the impact of the policy is to have a genuine reduction in carbon emissions rather than simply moving production overseas. That is the driving principle behind the regulations, the framework in its totality, and the details that we are debating. I thank all right hon. and hon. Members for their contributions and commend the regulations to the Committee.

Question put.