Recommendations & Conclusions
20 items
1
Conclusion
Fifth Report - Greening imports: a UK c…
Effective carbon pricing is crucial to decarbonisation, but cannot be achieved without effective anti-carbon leakage policies in place. The Government’s current approach to addressing the risks of carbon leakage, including free allocation of Emissions Trading Scheme (ETS) allowances, is insufficient on its own to incentivise industrial decarbonisation effectively. A clear …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
2
Conclusion
Fifth Report - Greening imports: a UK c…
Multilateral and global approaches to carbon pricing represent the most appropriate way to support global decarbonisation. Since the process to negotiate and agree these is lengthy, they cannot provide the urgent action necessary in the short term. Pursuing a unilateral carbon border approach does not preclude continuing to push for …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
3
Conclusion
Fifth Report - Greening imports: a UK c…
While net zero policies address the UK’s territorial production emissions, 43% of the UK’s consumption emissions arise from imports. The UK’s principal carbon pricing mechanism, the ETS, applies to domestic production, but no carbon price is currently applied to imports of the same products. A CBAM could address this, enabling …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
4
Conclusion
Fifth Report - Greening imports: a UK c…
Alongside CBAM, the UK’s carbon border approach needs to comprise a set of complementary policies, including product standards, to tackle consumption emissions beyond those covered by explicit carbon pricing, and support decarbonisation across the economy. Careful design is needed to ensure the carbon border approach is successful in achieving its …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
5
Recommendation
Fifth Report - Greening imports: a UK c…
We recommend that the Government commence work immediately on developing a comprehensive UK carbon border approach, in order that this might be implemented during the 2020s. We recommend that this include a CBAM as part of a co-ordinated set of policies including product standards, alongside work to build consensus with …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
6
Conclusion
Fifth Report - Greening imports: a UK c…
The UK is an open, trading economy, and trade can be a powerful lever to drive environmental outcomes. Careful design, alongside inclusive engagement with trading partners, is needed to ensure that any CBAM and wider carbon border approach are aligned with the UK’s international obligations and commitments, including the principle …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
7
Conclusion
Fifth Report - Greening imports: a UK c…
As the UK continues to negotiate its own trade agreements following exit from the European Union, there is an opportunity to align trade policy with the UK’s role as a leader in climate change action; further analysis is required to understand how the UK’s carbon border approach might interact with …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
8
Conclusion
Fifth Report - Greening imports: a UK c…
Our recommendations to Government on the design of the carbon border approach are as follows: a) to ensure, from the outset, that the carbon border approach is designed to adhere to the principles of common but differentiated responsibilities and respective capabilities set out in the Paris Agreement and Glasgow Climate …
Government response. Upholding trade openness remains a priority for this Government. As set out above, if implemented, the Government is clear that any policy or suite of policies would need to carefully balance a range of priorities for the UK, including compliance …
9
Conclusion
Fifth Report - Greening imports: a UK c…
In our view, the Government’s commitment to work with stakeholders to understand the potential impact of an EU CBAM on UK industry and ensure no unreasonable barriers to trade is welcome. Given the potential UK impacts, clarity is needed on how the Government intends to do this, and urgently, given …
Government response. We are actively engaging with the EU on their CBAM proposals through formal channels, such as our UK Mission to Brussels, and informal channels, as we do on other elements of the international tax and trade agendas. The UK has …
10
Conclusion
Fifth Report - Greening imports: a UK c…
It is at present unclear how the proposed EU CBAM might impact the UK, particularly Northern Ireland, where electricity generators are currently under the scope of the EU’s ETS. We understand that this is a dynamic discussion which depends on wider continuing negotiation between the UK and EU, as well …
Government response. We are actively engaging with the EU on their CBAM proposals through formal channels, such as our UK Mission to Brussels, and informal channels, as we do on other elements of the international tax and trade agendas. The UK has …
11
Conclusion
Fifth Report - Greening imports: a UK c…
The Government has committed to ensuring businesses do not face any unreasonable barriers to trade; further detail would be welcome on how it plans to work with stakeholders in the EU and UK to achieve this. Given that electricity generators in 48 Greening imports: a UK carbon border approach Northern …
Government response. We are actively engaging with the EU on their CBAM proposals through formal channels, such as our UK Mission to Brussels, and informal channels, as we do on other elements of the international tax and trade agendas. The UK has …
12
Conclusion
Fifth Report - Greening imports: a UK c…
The UK and EU have agreed to consider linking the UK and EU ETS systems, which would exempt UK producers from the EU’s CBAM (and vice versa), simplifying administrative processes for UK-EU trade; as linking can be a lengthy process, it is important for exploratory work to commence on this …
Government response. The Government is open to linking the UK ETS internationally in principle and is considering a range of options. No decision on any preferred linking partners has yet been made. Under the Trade and Cooperation Agreement (TCA) the UK and …
13
Recommendation
Fifth Report - Greening imports: a UK c…
We recommend that the Government: a) Set out in its response to this report: b) how it intends to work with stakeholders in the EU and UK to understand how the proposed EU CBAM, would affect the UK, including in Northern Ireland; and c) how it intends to ensure open …
Government response. As noted above, we have announced our intention to consult on a range of carbon leakage mitigation options, including on a UK CBAM, later this year. This announcement does not commit the Government to any course of action down the …
14
Conclusion
Fifth Report - Greening imports: a UK c…
As the report of the Treasury’s Net Zero Review notes, there can be no one-size-fits- all mechanism to address carbon leakage risks. The UK’s carbon border approach needs to comprise a set of complementary policies, designed to drive industrial decarbonisation in the UK and globally. A CBAM will be an …
Government response. The Government agrees that we need multilateral solutions. Indeed, we are firmly of the view that the best way to address carbon leakage would be for all countries to move together in pricing and regulating carbon emissions. We are committed …
15
Conclusion
Fifth Report - Greening imports: a UK c…
To navigate the design options available and ensure a policy response that is effective in achieving its objectives, it is important that the Government articulate from the outset the objectives of the UK’s carbon border approach, so that the design is led by these, and understand the potential impacts to …
Government response. As noted above, we have announced our intention to consult on a range of carbon leakage mitigation options, including on a UK CBAM, later this year. This announcement does not commit the Government to any course of action down the …
16
Recommendation
Fifth Report - Greening imports: a UK c…
We recommend that the Government: a) clearly define its objectives for any carbon border approach at the outset, and ensure the choice of policy options and design consideration at each stage is led by these objectives. These should encompass the need to drive decarbonisation across Greening imports: a UK carbon …
Government response. As noted above, we have announced our intention to consult on a range of carbon leakage mitigation options, including on a UK CBAM, later this year. This announcement does not commit the Government to any course of action down the …
17
Conclusion
Fifth Report - Greening imports: a UK c…
Pricing the carbon element, so low-carbon products become less expensive than high-carbon ones, is a powerful lever to reduce consumption emissions, to support the development of low-carbon products and increase access to such products. Currently, high energy prices and rises in inflation are contributing to stark rises in living costs; …
Government response. As noted above, we have announced our intention to consult on a range of carbon leakage mitigation options, including on a UK CBAM, later this year. This announcement does not commit the Government to any course of action down the …
18
Recommendation
Fifth Report - Greening imports: a UK c…
We recommend that the Government, at the design stage: a) Include a strategy to engage with the public in the design of the carbon border approach to develop and maintain public support and keep the public informed of the changes that would occur, the rationale and methodology supporting the changes, …
Government response. As noted above, we have announced our intention to consult on a range of carbon leakage mitigation options, including on a UK CBAM, later this year. This announcement does not commit the Government to any course of action down the …
19
Conclusion
Fifth Report - Greening imports: a UK c…
The UK’s carbon border approach needs to be aligned with the Government’s wider environmental policies, and integrated into trade, development and fiscal policy. The context for carbon border measures is not fixed, and CBAM in particular represents a new policy lever. It is important that the UK’s design for a …
Government response. The Government agrees with the importance of aligning our approach to carbon leakage with our wider environmental, trade, development, and fiscal policy. We will continue to engage with all the appropriate Cabinet Committees as we consult on a possible UK …
20
Recommendation
Fifth Report - Greening imports: a UK c…
We recommend that the Government: a) Ensure, through the oversight of both Cabinet Committees on Climate Action, that the UK’s carbon border approach is aligned with existing environmental, trade, development and fiscal policy, through both its design and implementation stages. This should include setting out how the carbon border approach …
Government response. The Government agrees with the importance of aligning our approach to carbon leakage with our wider environmental, trade, development, and fiscal policy. We will continue to engage with all the appropriate Cabinet Committees as we consult on a possible UK …