Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department has taken to ensure that the UK’s Carbon Border Adjustment does not adversely impact business competitiveness.

The UK Carbon Border Adjustment Mechanism (CBAM) will give UK industry confidence to invest in their decarbonisation efforts. The CBAM will ensure highly traded, carbon intensive products from overseas face a comparable carbon price to those produced here so that UK decarbonisation efforts lead to a true reduction in global emissions rather than simply displacing carbon emissions overseas.

To ensure the costs of complying with the UK CBAM are proportionate, the UK CBAM will only apply to those importing CBAM goods valued at £50,000 or more over a rolling 12-month period. We estimate that will exclude 80% of CBAM goods but retain over 99% of imported emissions within the scope of the tax. Of those removed, over 70% are SMEs.

An assessment of CBAM impacts on the economy and businesses will be provided when the policy is final or near final, in the form of a tax information and impact note. A draft version of this is available at:

https://www.gov.uk/government/consultations/draft-legislation-carbon-border-adjustment-mechanism/draft-tax-information-and-impact-note