Recommendations & Conclusions
10 items
1
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 policy response is needed to address this; we consider that a UK carbon border approach is the most appropriate response.
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Government response AI summary
The government agrees that multilateral solutions are needed and is working internationally to promote carbon pricing and build a common understanding of carbon leakage risks, and announced its intention to consult on a range of carbon leakage mitigation options.
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2
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 global action; rather, unilateral action may support these efforts by encouraging other jurisdictions to strengthen their own decarbonisation policies and spurring co-operation on multilateral solutions, while delivering the action needed to address emissions in the meantime. It is important that unilateral action is aligned with the UK’s international obligations and commitments.
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Government response AI summary
The government agrees that multilateral solutions are needed and is working internationally to promote carbon pricing and build a common understanding of carbon leakage risks, and announced its intention to consult on a range of carbon leakage mitigation options.
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6
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 of common but differentiated responsibilities and respective capabilities in respect of low- and middle-income country trading partners, as set out in the Paris Agreement and Glasgow Climate Pact.
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Government response AI summary
The government agrees that multilateral solutions are needed and is working internationally to promote carbon pricing and build a common understanding of carbon leakage risks, and announced its intention to consult on a range of carbon leakage mitigation options.
Read full response →
8
Recommendation
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 Pact in respect of low- and middle-income country trading partners. This might be through the CBAM design itself, or through a complementary policy in parallel to the CBAM; b) to ensure that the UK CBAM is designed in accordance with WTO rules; c) to establish forums to enable inclusive engagement with trading partners on the design and implementation of the carbon border approach. These should include forums specifically for engagement with low- and middle-income country trading partners; and d) to conduct analysis to understand how the carbon border approach might interact with free trade agreements.
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Government response AI summary
The government acknowledges the importance of balancing priorities including WTO rules, free trade, and the needs of developing countries. They will continue working with international partners in the G20, WTO, and OECD to advance global climate goals and are supporting developing countries' climate ambitions with …
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9
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 that the proposed EU CBAM is intended to be fully in effect from the mid-2020s.
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Government response AI summary
The government is actively engaging with the EU on their CBAM proposals through formal and informal channels and expects the EU CBAM to take into account the UK's carbon pricing.
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10
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 as developments in the proposed EU CBAM. It is nevertheless important that UK stakeholders are kept informed.
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Government response AI summary
The government is actively engaging with the EU on their CBAM proposals and will continue to engage with stakeholders and monitor developments closely to build a full understanding of the implication of the EU CBAM on the UK’s trading relationship with the EU, including with …
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11
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 Ireland are under the scope of the EU ETS, it will be important to work with stakeholders to understand how this might interact with the UK CBAM and wider carbon border approach.
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Government response AI summary
The government is actively engaging with the EU on their CBAM proposals through formal and informal channels and expects the EU CBAM to take into account the UK's carbon pricing.
Read full response →
12
Recommendation
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 now. This may also be a welcome sign that there is a political recognition on both sides that linkage of CBAM schemes in due course could be achievable.
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Government response AI summary
The government states it is open to linking the UK ETS internationally in principle and is considering a range of options, and that cooperation and dialogue on carbon pricing will continue to be important.
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14
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 important lever to support decarbonisation in key foundational sectors; complementary mechanisms such as standards, regulation and support for low-carbon technologies are also required to drive this change across the economy.
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Government response AI summary
The government agrees that multilateral solutions are needed and is working internationally to promote carbon pricing and build a common understanding of carbon leakage risks, and announced its intention to consult on a range of carbon leakage mitigation options.
Read full response →
19
Conclusion
Fifth Report - Greening imports: a UK c…
Acknowledged
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 …
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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 carbon border approach include a strategy for ongoing monitoring of its impact, to ensure its objectives are being achieved. (Paragraph 106) 50 Greening imports: a UK carbon border approach
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Government response AI summary
The government agrees with the importance of aligning its approach to carbon leakage with its wider environmental, trade, development, and fiscal policy and will continue to engage with all the appropriate Cabinet Committees as it consults on a possible UK CBAM.
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