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The UK plans to implement a new carbon pricing mechanism for imports by 2027, requiring a carbon tax on imports from countries with low or no carbon prices.
The Carbon Border Adjustment Mechanism (CBAM) will apply to carbon-intensive products, including steel, aluminium, fertilizers, etc. The tax will be based on the difference between the carbon emissions of imported goods and the carbon price of the country of origin and the UK carbon price.
The UK government said the move would ensure that carbon-intensive products overseas face the same carbon price as UK products, reducing the risk of carbon leakage. The CBAM will work in tandem with the UK Emissions Trading Scheme.
The decision aims to boost global efforts to reduce emissions and prevent emissions from flowing out due to lower carbon prices in other countries. (Source: Reuters Image source: freepik)
