EAC launches new inquiry weighing up carbon border tax measures

• Inquiry: Carbon border adjustment mechanism
• Envrionmental Audit Committee

If adopted by the UK Government in the future, a CBAM could crack down on the carbon footprint of many imported goods and address carbon leakage. The Climate Change Committee (CCC) has said that a CBAM could prompt other manufacturing countries to decarbonise.

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.

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.

Chair's comment

Environmental Audit Committee Chairman, Rt Hon Philip Dunne MP, launching the EAC’s call for evidence, said:

“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.”

Terms of reference

Send us your views

• Submit written evidence to the inquiry

The Committee is inviting written submissions by 25th October. These should focus on, but not be limited to:

• What are the risks to the UK posed by carbon leakage? How effective is the Government’s current approach to tackling carbon leakage?
• What role could a carbon border adjustment mechanism (CBAM) play in addressing carbon leakage and meeting the UK’s environmental objectives?
• Should the Government pursue a unilateral CBAM? If so, why and what form should this take? If not, are there alternative approaches to addressing carbon leakage which the Government should be considering?
• If the Government were to introduce a CBAM, which products or sectors should be included and why?
• What impact might a CBAM have on UK (i) industry, (ii) employment and (iii) consumers?
• What risks would need to be managed when designing and implementing a CBAM?
• What wider opportunities and benefits might arise from introducing a CBAM?
• How might a CBAM interact with the UK’s international obligations, including on trade and the environment?
• Should the CBAM design include any special regard, e.g. for developing countries or small and medium-sized enterprises? If so, which circumstances should be given special regard, and what impact might this have? If not, why not?
• What practical and administrative challenges might arise when designing and implementing a CBAM? How might these be addressed?

Further information

• About Parliament: Select committees
• Visiting Parliament: Watch committees

Inquiry: Unsplash