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UK carbon pricing levy overview:
- Who: The UK government has put a new levy in place for goods that are imported into the country from places with a lower or no carbon price.
- Why: The government said the new rules will support its effort for decarbonisation and its goal of being a net zero economy.
- Where: The levy would apply to countries importing goods into the UK.
New rules have been put in place by the UK government requiring goods that are imported into the country from places with a lower or no carbon price to pay a levy, by the year 2027.
The new levy will support its drive for decarbonisation by reducing the risk of ‘carbon leakage’ and preventing emissions from being displaced to other countries in the event they have a lower or no carbon price, the government said this week.
Overseas imports that are set to face a comparable carbon price as a result of the so-called carbon border adjustment mechanism to those same goods produced in the UK include iron, steel, aluminium, ceramics and cement.
“This levy will make sure carbon intensive products from overseas – like steel and ceramics – face a comparable carbon price to those produced in the UK, so that our decarbonisation efforts translate into reductions in global emissions,” said Chancellor of the Exchequer Jeremy Hunt, in a statement.
Levy charge calculated based on gap in carbon price from origin country and UK, says government
The government said the new levy will help accomplish its goal of being a net zero economy, explaining the country’s net zero efforts will ultimately not succeed if decarbonisation in the UK “simply leads to higher emissions abroad.”
Charges that are applied by the new levy will be calculated based on the amount of carbon that is emitted during the production of imported goods and the difference between the carbon price in their origin country and that of UK producers, the government said.
“This should give UK industry the confidence to invest in decarbonisation as the world transitions to net zero,” Hunt said.
In past climate-related news, a group of six Portuguese children filed a complaint against a total of 33 countries — including the UK — in 2020 over claims their governments were endangering their future by allegedly failing to act to prevent climate change.
What are your thoughts on the new carbon pricing levy? Let us know in the comments.
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