Chancellor misses opportunity to confirm carbon border policy, says UK Steel

UK Steel, the trade association for steel companies in the UK, has stated that the UK Chancellor has missed a major opportunity to confirm that the UK will implement a Carbon Border Adjustment Mechanism (CBAM) in his Autumn Statement. UK Steel says that the country is now in danger of playing catch-up with the EU on timetables, leaving a critical, trade-exposed industry at risk.

A UK CBAM would create a level playing field on carbon pricing, ensuring that imported steel pays the same carbon costs as UK steelmakers, states UK Steel. It believes a UK CBAM is essential to prevent deindustrialisation (also known as carbon leakage), where high carbon costs and climate change regulations are placed on domestic producers, but not foreign producers which then export high-emission steel to the UK. As over 90% of the world’s steel faces low or no carbon costs, a UK CBAM is essential to the UK steel industry competing on a level playing field.

The European Union is in the process of implementing its own CBAM policy by 2026. Without confirming a UK CBAM, high-emission steel currently exported to the EU could be diverted to the UK, which may completely drown the UK steel market.

Lack of clarity and mutual recognition between the UK and European Union CBAM policies and Emission Trading Schemes could mean new trade restrictions. 75% of the UK steel industry’s exports – totalling 2.55Mt of steel (£3.5bn in value) – goes to European markets. Without mutual recognition and linked emission trading schemes, UK-made steel will face a financial trade barrier when trading with its biggest export market from 2026.

UK Steel director general, Gareth Stace, said: “It is disappointing that the Chancellor did not use his Autumn Statement to announce a UK CBAM and a timetable to implement it by 2026. Imported steel should also pay for its carbon footprint as we have done for years. With over 90% of global steel production facing no carbon cost, it is only right to introduce a carbon border policy to create a level playing field on carbon pricing. It is a missed opportunity not to set out the Government’s plans for its own carbon border policy.

“As UK steelmakers are announcing plans for green steelmaking, a UK CBAM will be essential to these investments, making sure that low-emission, green, UK-made steel is not undercut by high-emission, imported steel, which has not faced carbon costs.

“Delaying the confirmation of a UK carbon border policy will risk the UK playing catch-up with the EU on timetables. The steel industry needs certainty, not further delays.”