UK industry groups have warned that the government’s planned carbon border tax, set to take effect in January 2027, could accelerate deindustrialization rather than support decarbonisation, according to comments made to the Financial Times.
Representatives from the steel, cement and chemicals sectors argue that the UK Treasury’s proposed Carbon Border Adjustment Mechanism (CBAM) fails to address key industry concerns and could leave domestic producers at a competitive disadvantage compared to overseas suppliers.
UK Steel said the current structure of the scheme would favor imports over domestic production, undermining investment in low-carbon technologies. Industry groups have also raised concerns that, unlike the EU CBAM introduced in January 2026, the UK plans to apply a single average emissions rate per sector, rather than differentiating by product type and country of origin.
According to industry bodies, this approach risks allowing high-carbon imports to underpay for their true emissions, distorting competition and weakening carbon pricing effectiveness. Another major concern is that the UK CBAM provides no protection for exports, unlike the EU system, increasing risks for export-oriented sectors.
Industry representatives also warned of dumping risks, as the one-year gap between the EU and UK CBAM start dates could incentivize producers to redirect shipments to the UK. Some early signs of market distortion have already emerged, with reports of import deals structured to avoid future carbon charges.
The UK Treasury has defended the policy, stating that the CBAM will ensure imported carbon-intensive goods face a comparable carbon price to that paid by UK producers, and said the government will continue engaging with industry and review the scheme after implementation to ensure fair and effective decarbonisation.
VietnamSteel by Hoa Sen Group
