UK steel industry among most exposed to EU carbon levy proposals

7 December 2021

EU proposals targeting products with high carbon inputs would have a disproportionate impact on exports from the crisis-hit British steel industry, potentially impacting sites in Wales, the North East, Humberside and Yorkshire.

The claim was made in a Chatham House study analysed by the European Scrutiny Committee as part of its regular scrutiny of new and proposed EU legislation examining how they could affect the UK published today.

The levy, known as the Carbon Border Adjustment Mechanism, applies a charge on the import of certain products depending on how much carbon dioxide (CO2) was emitted during production. The charge will be equal to that levied on EU manufacturers of the same products through the block’s domestic Carbon Trading System. While UK goods already face a charge under the UK’s own emissions trading system and so would not be charged again, a large amount of bureaucracy would be involved, proving how much carbon was emitted during production and providing evidence that a charge had been paid.

Although an agreement was reached between both parties on considering linking their emissions trading schemes as part of the UK/EU Trade and Cooperation Agreement signed in December 2020, little more has been heard since. MPs on the European Scrutiny Committee have demanded clarity from the Government on progress of talks.

Other analysis in today’s report

Today’s European Scrutiny Committee report also includes analysis of:

Proposed directive on standardised universal charger for smartphones and mobile devices - apply to Northern Ireland, potentially causing a divergence of standards with the rest of the UK.
An update to the list of independent arbitrators and amendments to the provision on social security coordination.

Further information

Image: Unsplash/Rob Lambert