UK Steel has been a thought leader on the implementation of a UK Carbon Border Adjustment Mechanism (UK CBAM) since recommending its implementation in 2021. With the recent report on key design principles, UK Steel is firing the starting gun on the UK CBAM and sets out how the Government can ensure robust carbon leakage protection and create a level playing field on carbon costs.

The UK Government has confirmed that it will introduce a UK carbon border by 2027, which will be vital to ensuring a level playing field on carbon costs for the steel industry. However, UK Steel syas that if the UK CBAM policy is not designed correctly, we could see steel flooding into the UK that did not face a carbon price and therefore undercuts its domestic market with high-emission steel, making a mockery of the Government’s ‘net zero’ ambition.

In its new report, UK Steel sets out 12 crucial design principles for guaranteeing a robust policy with minimal risk of circumvention, strong carbon leakage protection, and simplicity of administration for governments and industry alike. A key recommendation includes bringing the UK CBAM forward to 2026, in line with the European Union (EU), to minimise the risk of trade barriers and trade diversion.

Gareth Stace, UK Steel director general, said: “Over 90% of global steel production faces no carbon cost, so it is crucial that a new UK carbon border creates a level playing field on carbon pricing. This will ensure that imported steel faces similar levels of carbon costs as domestic steel producers. The UK CBAM must be designed to be robust and impenetrable. Otherwise, there is a substantial risk of significant damage to the UK steel industry at the time of once-in-a-lifetime investment in ‘state of the art’, modern ‘net zero’ steel production.”

He concluded: “In our new report, we put forward twelve new recommendations to get the implementation of the CBAM right. It provides a stake in the ground for designing a UK CBAM to work for industry, Government, and consumers alike while providing necessary carbon leakage protection and enabling free trade. We look forward to working with the Government to ensure the UK CBAM works for industry and provides shielding against high-emission imported steel, enabling a fair, competitive environment.”