To ask His Majesty's Government what assessment they have made of whether not implementing a Carbon Border Adjustment Mechanism in the UK will pose any risk to the steel industry's ability to export.
Answered on
28 June 2023
Carbon leakage risk is currently managed by at-risk sectors, including steel, receiving a proportion of carbon allowances free of charge (free allocation) in the UK Emissions Trading Scheme. The UK ETS Authority has committed to maintain current levels of free allocation for industrial sectors until 2026. There is a further consultation at the end of 2023 to better target the remaining free allocations toward sectors considered to be at risk of carbon leakage, due to be implemented in 2026.
The government has recently consulted on potential future measures to mitigate carbon leakage risks, including the potential for a UK Carbon Border Adjustment Mechanism (CBAM). The consultation closed on 22 June 2023, and the government is considering a wide range of stakeholder responses before taking any decisions. The government will respond to the consultation in due course.