The UK government announced its plan to institute a Carbon Border Adjustment Mechanism (CBAM) by 2027, focusing on imports of iron, steel, aluminum, ceramics, and cement. This implementation comes a year after the EU's similar system. The objective is to support the nation's decarbonization efforts, yet UK Steel voices apprehension about the timeline not aligning with the EU's CBAM rollout, fearing repercussions.

 

The delay in CBAM implementation raises concerns for UK Steel, anticipating potential dumping of high-emission steel in the UK from 2026 when the EU CBAM takes effect. This influx could exert pressure on domestic steel prices and expose the industry due to ending steel safeguard quotas in 2026.

 

UK Steel stresses the necessity for mutual recognition between the UK and EU CBAM policies and Emissions Trading System (ETS) to avoid trade barriers. With 75% of UK steel exports heading to European markets, the divergence in timelines might pose financial obstacles for UK-made steel in its biggest export market.

 

The charge levied by the UK CBAM hinges on the carbon emitted during production and the difference in carbon pricing between the country of origin and UK producers.

 

Further consultations in 2024 will delve into refining CBAM specifics, including the products covered under its scope. Additionally, the UK aims to establish a framework to measure the carbon content of goods.

 

The CBAM will complement the UK Emissions Trading Scheme to mitigate carbon leakage risks. The intent behind the levy is to ensure comparable carbon prices for products from overseas, like steel and ceramics, aligning with the UK’s decarbonization objectives. steelguru