UK to Consult on Carbon Border Adjustment Mechanism

The UK government will consult this year on the possible introduction of a carbon border adjustment mechanism to prevent carbon leakage, ie the displacement of production and associated C02 emissions between jurisdictions due to differences in carbon pricing and related climate regulations. The consultation will cover the suitability of a range of carbon leakage mitigation options in the context of the existing UK policy mix, according to a statement made by Lucy Frazer, Financial Secretary to HM Treasury. “The best way to prevent carbon leakage would be for all countries to move together in pricing, regulating, and therefore reducing carbon emissions. We are strongly committed to working with our international partners to develop a common global approach to carbon leakage,” said Frazer, noting that domestic action also needed to be taken given the time required to develop multilateral solutions. The announcement was welcomed by Chris Stark, CEO of the Climate Change Committee.

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