The UK’s current approach to carbon pricing is centred on the UK Emissions Trading Scheme, a cap-and-trade scheme which sets an overall limit on the total level of greenhouse gas emissions that can be generated from certain energy intensive industries, electricity generation, and aviation.
Dunne stressed it was time for the UK to take more responsibility of the emissions produced overseas in the manufacture of products for the UK market.
“While multilateral solutions remain the most effective way to address carbon leakage, the process to agree these is lengthy, so unilateral action is essential in the short-term,” the report notes.
The EU intends to introduce a CBAM from 2023 that would initally apply to imports of certain iron and steel, cement, fertiliser, and aluminium products, and electricity into the bloc.
“The UK is leading the way on the transition to net zero, has reduced emissions faster than any other country in the G20 and continues to have the most ambitious climate targets for 2030,” they said.