UK carbon import tax would protect British industry, Sunak says

The UK is working toward taxing imports of some products made using highly polluting processes, to help shield British manufacturers from competitors facing less stringent environmental regulations, Prime Minister Rishi Sunak said.

The government is “making progress on a carbon border adjustment mechanism,” Sunak told a parliamentary committee on Tuesday. “They are reasonable and sensible things to implement.”

Sunak said he’s also open to cooperating with European counterparts on the plan, and has previously discussed it with German Chancellor Olaf Scholz. Chancellor Jeremy Hunt has spent months looking at adding an emissions levy to protect the carbon-intensive steel industry, Bloomberg previously reported.

The European Union reached a deal to set up its own mechanism late last year, with the aim of ensuring its pollution standards aren’t undermined by trading partners with weaker ones.

Energy Secretary Grant Shapps is expected to outline on Thursday how the UK will boost its energy security. Shapps will also respond to US President Joe Biden’s Inflation Reduction Act, which contains hundreds of billions of dollars of subisidies for green technology, in a bid to prevent net zero investors turning to the US. 

The Times reported that Shapps will choose this moment to launch a long-awaited consultation on how to tackle the issue of “carbon leakage” — carbon emissions produced in manufacturing imported products.