The UK government has announced that it will impose a carbon levy on imports of iron, steel, aluminum, ceramics and cement through the carbon border adjustment mechanism (CBAM) by 2027 to support the country’s decarbonization efforts.
Accordingly, imports of the given products from countries with a lower or no carbon price will face the carbon levy. The levy will depend on the amount of carbon emitted in the production of the imported good, and the gap between the carbon price applied in the country of origin and the carbon price faced by UK producers.
In addition, the CBAM will work alongside the UK Emissions Trading Scheme to mitigate the risk of carbon leakage. The design and delivery of the CBAM will be subject to further consultation in 2024, including the precise list of products in its scope.