Factsheet: UK Carbon Border Adjustment Mechanism

The text addresses carbon leakage and how the UK is tackling this issue by introducing a Carbon Border Adjustment Mechanism (CBAM). Carbon leakage occurs when production and emissions move to countries with less stringent regulations, potentially undermining global efforts to reduce greenhouse gas emissions. To address this, the UK will implement the CBAM by 2027, applying a carbon price to certain imported goods based on the intensity of their emissions and the difference between the carbon price in the country of origin and the UK. The CBAM will initially apply to highly emissions-intensive industrial sectors such as aluminum and steel. The CBAM will work in conjunction with the UK Emissions Trading Scheme (UK ETS), which already imposes a price on greenhouse gas emissions. The goal is to prevent carbon leakage and ensure fair competition between domestic and imported products.