The UK government is consulting on how to prevent carbon leakage – that is, how to prevent UK taxes on greenhouse gas emissions simply leading to emissions-generating activities moving abroad. One of the main options up for consideration is a Carbon Border Adjustment Mechanism (CBAM)– a tax on imports based on their embedded and untaxed carbon content. Should the UK introduce a CBAM? Would it promote fair competition between firms in different countries and help to drive down global carbon emissions?
If the UK adopts a CBAM, how should it be designed? Which products should it apply to, how should untaxed carbon content be measured and how should exports be treated? When would a CBAM risk challenge under international agreements? What other policies need to sit alongside a CBAM to stop carbon leakage?
The expert panel who discussed these crucial and topical questions were:
Michael Keen, Ushioda Fellow at Tokyo College, University of Tokyo and an International Research Fellow at the Institute For Fiscal Studies
Alice Pirlot, Assistant Professor, International Law, Faculty Associate, Centre for Finance and Development, Geneva Graduate Institute
Jennifer Rowland, Deputy Director for Energy and Transport Tax, HM Treasury
Richard Woolley, Head of Energy and Climate Change, Chemical Industries Association
The event was chaired by Helen Miller, Deputy Director at the IFS.