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Fuel Duty: Carbon Border Adjustment Mechanism

Volume 742: debated on Tuesday 19 December 2023

18. If he will make an estimate of the potential impact of a carbon border adjustment mechanism in the form recommended by the Commission for Carbon Competitiveness on fuel duty. (900750)

The Government have announced that they will implement a CBAM from January 2027. The UK CBAM will place a carbon price on some of the most emissions-intensive industrial goods imported to the UK and will ensure that the UK’s decarbonisation efforts lead to a true reduction in global emissions, rather than simply displacing carbon emissions overseas. The delivery of a CBAM will be the subject of further consultation in 2024.

I congratulate the Minister. A CBAM is the cheapest and most future-proof way to save the planet and UK manufacturing jobs at the same time, but some of the details look troubling. Why have some manufacturing industries been left out entirely? Why are others arriving late, so they will be vulnerable to dumping? And how will he ensure that this is not just a tax and price rise for already hard-pressed families and businesses?

I recognise and thank my hon. Friend for his work as chair of the Commission for Carbon Competitiveness. I will directly address his two main questions. On speed, implementation by 2027, at the latest, will allow the Government to engage with businesses to ensure that they are well prepared, but next year’s consultation will provide more information on timings. We have identified eight sectors that have the greatest exposure to carbon leakage, from both a trade and an emissions perspective.