Source · Select Committees · Business and Trade Committee
Recommendation 14
14
Accepted
Link and keep aligned the UK and EU Emissions Trading Schemes to prevent trade barriers.
Recommendation
To prevent the UK and EU’s respective Carbon Border Adjustment Mechanism schemes from becoming barriers to trade in electricity and carbon- intensive goods, when doing so maximises export potential and reduces consumer costs, the Government should seek to link, and keep aligned, the UK Emissions Trading Scheme with the EU Emissions Trading Scheme. The Government should ensure action is in place to mitigate any impacts while the EU’s Carbon Border Adjustment Mechanism is in place and the UK’s is not. (Recommendation, Paragraph 66)
Government Response Summary
The government accepted the recommendation, stating that parameters for a new agreement to link the UK and EU Emissions Trading Schemes have been agreed, with technical negotiations to begin shortly. This agreement is expected to facilitate mutual CBAM exemptions and achieve economic benefits. The government is also engaging with businesses to mitigate the impacts of the EU CBAM.
Government Response
Accepted
HM Government
Accepted
The Government welcomes the Committee’s recommendation on mitigating the impact of the EU Carbon Border Adjustment Mechanism (CBAM) through linking UK- EU Emissions Trading Schemes (ETSs); £7 billion worth of UK exports are at risk of being hit with the EU CBAM. We have agreed the parameters for a new agreement to link ETSs with the EU. An agreement will facilitate a cheaper path to net zero with a larger and more stable carbon market, and add up to £3.8bn a year to our economy in the long run. An agreement will also create the conditions for mutual CBAM exemptions. We will now begin technical negotiations with the EU. UK officials have been discussing CBAM requirements with the EU and engaging affected businesses to support them in responding to new requirements.