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UK government urged to introduce carbon border tax on cheap imports

Published March 29, 2022

UK government urged to introduce carbon border tax on cheap imports

The British government should make importers to the UK purchase carbon certificates to prevent their products undercutting domestic goods which are subject to more stringent UK climate laws.

That’s one of the recommendations of a new report from an alliance of prominent businesses, the Aldersgate Group. If the government implemented the proposal, it would effectively create a national Carbon Border Adjustment Mechanism (CBAM). Such a scheme would prevent high carbon imports from gaining market share at the expense of low carbon goods produced by UK firms.

The carbon certificates sold under the CBAM would correspond in value to the domestic carbon price foreign importers would have paid if they had produced their goods in the UK.

Meanwhile, Alfa Energy believes British manufacturers can mitigate such disadvantages by analysing their manufacturing processes using lifecycle costing in combination with lifecycle assessment to identify where best to introduce the latest green materials and processes.

The CBAM is one of a number of recommendations made in the report. The report claims such measures are necessary if UK industry and manufacturing are to meet the demand for low carbon products while reducing the UK’s dependency on materials and components from other, less regulated countries.

The report also urges the UK government to introduce mandatory product standards which set permitted levels of embodied carbon, lifecycle emissions, and recycled content of products sold on the UK market. The report claims such standards would stimulate demand for low carbon materials, such as recycled steel in the automotive sector, or cement with lower levels of embodied carbon in the buildings sector.

In addition, the report says government and large businesses should put in place policies which stipulate the procurement of a greater proportion of low carbon products. It is thought this would drive demand for goods with lower levels of embodied and lifecycle emissions. This would incentivise heavy industry in the UK to switch to greener production processes.

According to Seyed Ebrahimi, Alfa Energy’s Principal Consultant, Sustainability Strategy, British companies must find a way to remain competitive. “Depending on their size and revenue, British manufacturers are under mandatory or voluntary pressures in meeting government’s climate thresholds. As a result, many firms are adopting green technologies, but scalability is a challenge, and none are cheap yet.

“We at Alfa Energy can help British companies develop more effective competing strategies. We do this by analysing the company’s upstream/downstream supply chain activities and assist them with quantifying the various nodes of material and energy inputs for a given manufacturing process. Once we’ve established where the hotspots are, we help develop realistic targets and intervention points to optimise the cost and environmental efficiency of the processes. In other words, we combine lifecycle costing with lifecycle assessment and provide clients with a more informed trade-off between financial health and long-term/short-term environmental targets. This could help British manufacturers level the playing field and realistically compete with their foreign counterparts that manufacture goods in less regulated environmental jurisdictions”

Ultimately, Ebrahimi says, British manufacturers will be leaders in intellectual property, having fully adopted the use of low carbon materials and processes. When the use of alternative materials or new manufacturing technologies and practices become the norm, those that have not adapted to these new ways of production will have no choice but to seek out the expertise of those that have.