Our manufacturing industries are part of the fabric of the local economies in which they are based, and make significant contributions to national GDP, but they are not operating on a global level playing field. They are unfairly competing with international businesses who can dominate supply chains and produce products without having to worry about carbon pricing, regulations, or the same level of environmental targets.
British manufacturers are already suffering because of this, with investment and jobs being lost to carbon-intensive nations and regions where there is little or no costs attached to emitting carbon. This is known as ‘carbon leakage’, and if the UK’s carbon competitiveness is not addressed, we risk a reality in which decarbonisation occurs through deindustrialisation.
That is why today, we are re-launching the cross-party and cross-industry Commission for Carbon Competitiveness with a renewed team of commissioners. From our different perspectives we nonetheless have a united mission: to ensure reaching net zero and our wider energy policy does not undermine the competitiveness of British industry.
Key to this will be the implementation of a well-designed Carbon Border Adjustment Mechanism (CBAM), that applies the same carbon price to goods in the UK market that is currently only borne by British industry. Our first report, Fixing the Carbon Leak, was published in August 2023 after gathering evidence from industry, MPs and academics on proposals to tackle carbon leakage. Its core recommendation was for the UK to implement its own CBAM, and we were delighted to see the previous government adopt this recommendation soon after.
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Fast forward and we have now seen a commitment to introduce a UK CBAM in every major party’s manifesto. This marks significant progress.
However, in its current form, the proposed UK CBAM has a number of flaws that must be addressed. Alongside the omission of some foundational sectors from its scope, the slower timescale for implementation compared to the EU’s own CBAM risks exposure to the damaging practice of ‘dumping’ of carbon-intensive products in the UK.
With legislation to enact the UK CBAM yet to be published, there is time to iron out these crinkles.
For example, through engaging further with industry, government can develop clear pathways to CBAM inclusion for all manufacturing sectors over time, creating much-needed regulatory stability and building business confidence. The risk of carbon ‘dumping’ can also be squashed through bringing the current planned implementation date forward a year to 2026.
With the majority of the UK’s manufacturing industries relying on exports for their revenue, the Government must also consider how it can support the UK’s export market as well, by zeroing out the costs of the UK Emissions Trading Scheme for exported goods. Without this, our industries will continue to have their hands tied when trying to compete internationally.
With British manufacturing at a crossroads, the work of the Commission remains vital. We’ll continue to convene industry and parliamentarians over the course of this Parliament to advocate for a solution where growth in manufacturing and reducing carbon emissions are complementary, and not contradictory.
If you’d like to support us on this mission, please get in touch by emailing ccc@hanovercomms.com
Henry Tufnell, Labour MP for Mid and South Pembrokeshire, is the Chair of the Commission for Carbon Competitiveness. Melanie Onn, Labour MP for Great Grimsby and Cleethorpes, Nick Timothy, Conservative MP for West Suffolk, John Penrose, former Conservative MP for Weston-super-Mare and Commission founder, and Arjan Geveke, Director of the Energy Intensive Users Group are also Commissioners.
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