Source · Select Committees · Environmental Audit Committee
Recommendation 38
38
We recommend that the Government investigate the merits of carbon border adjustments, to accompany work...
Recommendation
We recommend that the Government investigate the merits of carbon border adjustments, to accompany work on a carbon tax, as one way of addressing carbon leakage. We recognise this would also require measures to ensure that such policies do not adversely impact developing countries. (Paragraph 229) Growing back better: putting nature and net zero at the heart of the economic recovery 77
Government Response
Acknowledged
HM Government
Acknowledged
As the UK transitions to net zero, the Government recognises the importance of addressing the risk of carbon leakage to ensure that the UK’s ambitious policy of decarbonisation is not undermined. As set out in the interim report of the Net Zero Review a range of approaches could potentially help address this, of which Carbon Border Adjustment Mechanisms are one. However, any trade policy measure must comply with the UK’s Free Trade Agreement (FTA) obligations and World Trade Organisation rules and it is not yet clear how a Carbon Border Adjustment Mechanism (CBAM) could be implemented in compliance with this and how effective it would be. Any policy will be evidence-based, proportionate and forward looking, and the Government will want to take into account the specific needs of the Least Developed Countries (LDCs).