British businesses and Conservative MPs tend to not be happy about the possibility of increased taxes. However, when it comes to carbon, many are actually advocating for higher taxes.

An increasing amount of producers, members of the Conservative Party, and specialists are advocating for fees to be imposed on the carbon emissions linked to imports. They argue that this levy is necessary to establish fair competition and allow UK businesses to invest in reducing their greenhouse gas emissions, without being disadvantaged by cheaper but more carbon-intensive imports from other countries.

Conservative politician, Jerome Mayhew, who serves on the environmental audit committee, believes that implementing a carbon charge will be well-received within his party, even though some of his peers may have reservations. Mayhew stated to the Guardian that placing a price on carbon allows the free market to discover more cost-effective and environmentally friendly production methods. He also emphasized that as Conservatives, promoting free trade and markets aligns with their fundamental beliefs.

As the UK strives for net zero greenhouse gas emissions, manufacturers will incur increased expenses for implementing new equipment and procedures. Without a carbon levy, companies that prioritize sustainability would experience a rise in costs, while imports from countries with less strict green regulations would thrive, ultimately leading to higher overall emissions and harm to the environment and UK economy.

Using a carbon tax, also referred to as a carbon border adjustment mechanism (CBAM), manufacturers in other countries like China would be motivated to reduce their carbon emissions and participate in environmentally-friendly practices.

In the past, some members of the Conservative party have believed that implementing a tariff on imported goods would be considered protectionist. Former Chancellor Rishi Sunak firmly opposed the concept of a Carbon Border Adjustment Mechanism (CBAM), dismissing it as a potential cause for increased prices.

However, the new Treasury leader, Jeremy Hunt, is believed to be more supportive of the measure. This is especially true since the EU has implemented a new CBAM, currently being tested, which will result in significant added expenses for UK companies unless the government takes action with their own measure.

Hunt’s upcoming announcement in response to the US Inflation Reduction Act, which is a $369 billion proposal by Joe Biden to boost the green industry, may include a suggestion for a trial levy. This plan will be revealed alongside the chancellor’s autumn statement next week.

A number of Conservative Members of Parliament informed the Guardian that they would support this proposal. Tim Loughton, a member of the Home Affairs Select Committee, stated that the current events in China, the EU, and the US make it necessary.

According to the speaker, the progress we have made in reducing carbon emissions has greatly improved the UK’s reputation globally and put us ahead in the development of environmentally-friendly industries. However, other countries also see the economic potential in decarbonisation. Without a Carbon Border Adjustment Mechanism (CBAM), there is a risk of outsourcing manufacturing to China, where large amounts of carbon-intensive goods are still being produced using coal-powered electricity. This could result in an influx of Chinese goods into the UK that were originally intended for the EU due to the implementation of the EU’s CBAM.

Robert Buckland, a former minister, said the proceeds of the levy could be put to good use within the UK. “CBAM will take further financial burdens off the taxpayer and put them on the polluter, [as] the revenue can be recycled for domestic net zero projects or support households with energy bills,” he noted.

The majority of manufacturers are in favor of the UK implementing a tax on high-polluting imports. According to a survey conducted by the thinktank E3G, 64% of upper management personnel in the UK manufacturing sector support this measure, which aims to encourage countries with lower environmental standards to reduce their emissions.

The director of the Conservative Environment Network, Sam Hall, advised Hunt to implement a CBAM that targets energy-intensive companies with large carbon footprints, which are at risk of being outcompeted by imported goods. This may encompass industries such as steel, chemicals, and other heavy manufacturing sectors.

He also suggested exceptions for imports from less affluent developing countries to prevent their products from being unfairly penalized. He stated, “There is still a discussion about the structure of CBAMs,” but also noted that well-designed CBAMs can address many potential concerns.

Source: theguardian.com