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Britain seeks views on 2027 carbon border tax

(Reuters, 21 Mar 2024) Britain has launched a consultation on how it should apply a new carbon import levy on some products from 2027 to help to protect businesses against cheaper imports from countries with less strict climate policies.

Britain, which has a target of reaching net zero emissions by 2050, launched an emissions trading system (ETS) in 2021 to charge power plants, factories and airlines for each tonne of carbon dioxide they emit as part of efforts to meet that goal.

The planned carbon border adjustment mechanism (CBAM) will apply to imports of carbon-intensive products in the iron and steel, aluminium, fertiliser, hydrogen, ceramics, glass and cement sectors. In documents published on Thursday, the government proposed seven rates of taxes for each sector, with the sectors to be kept under review.

The methodology used to set fees will depend on the amount of carbon emitted in the production of the imported good and any gap between the carbon price applied in the country of origin and the carbon price faced by UK producers. Other regions and countries, such as the European Union and China, operate such systems, but prices within the schemes vary and many countries have no carbon pricing at all.

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Reuters, 21 Mar 2024: Britain seeks views on 2027 carbon border tax