George Eustice, the UK Secretary of State for Environment, Food, and Rural Affairs, has indicated that the UK may eventually need to introduce a carbon border tax to prevent carbon leakage. While dismissing the idea of a domestic meat tax for emissions reduction, Eustice suggested that a levy on imports based on the CO2 emissions associated with meat production might be necessary to complement an emissions trading scheme (ETS) approach.
The Treasury and the Department for Business, Energy, and Industrial Strategy (BEIS) are reportedly exploring various models for implementing such a tax. The UK government has ruled out imposing higher costs on domestic meat producers through a CO2 tax. Eustice stressed the inevitability of a CO2 border tax within the logic of emissions trading schemes, highlighting the need to address countries that may not be adequately addressing their emissions. He emphasized a preference for a multilateral approach and a desire to protect domestic producers.
Reports suggest that UK Prime Minister Boris Johnson is not in favour of proposals that could result in higher consumer prices. However, he, along with other G7 leaders, recognizes the necessity of tackling carbon leakage.
The consideration of a carbon border tax by the UK reflects the government’s commitment to addressing concerns regarding the potential shifting of carbon-intensive activities to regions with less stringent emission reduction measures. The aim is to ensure a level playing field while incentivizing other countries to reduce their carbon footprints.
