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Energy UK responds to the Government announcement on the Carbon Border Adjustment Mechanism

Responding to the Government’s announcement on the Carbon Border Adjustment Mechanism (CBAM), Dhara Vyas, Deputy Chief Executive at Energy UK, said:

Energy UK welcomes the positive steps taken by the Government tackle carbon leakage, reducing the risk of production and associated emissions being displaced to other countries because they have a lower or no carbon price. A robust carbon price is critical to attracting investment in clean energy that can bring down prices, reduce emissions and bolster our energy security. However, we remain concerned that Power Generation has not been included in the scope of the proposed domestic Carbon Border Adjustment Mechanism.

“In a situation where traded electricity is covered by the EU’s CBAM but not a UK CBAM, we could see a scenario in which the UK imports more high-carbon electricity from the EU without pricing those emissions accordingly. All the while, British exporters of clean electricity may have to pay a substantial carbon price and face the regulatory burden of submitting large amounts of paperwork and information around the carbon intensity and origins of their exports.

“In the long term, the UK Emissions Trading System (ETS) and EU ETS should be linked and the prices harmonised. This linkage would negate the need for carbon borders between the UK and EU; removing the challenges applying CBAMs to certain products – such as electricity.