Ministers should consider a carbon tax on imports to help struggling British manufacturers, according to one of the government’s key advisers, despite fears such a measure could lead to a global trade war.
Lord Turner, who heads the UK committee on climate change, said the government should “rigorously assess” bringing in levies on cheap imports from countries outside the European Union, which are not subject to carbon-related costs such as the EU emissions trading scheme.
Ministers have in the past resisted calls from European counterparts to introduce such carbon levies, arguing they would be anti-competitive. In future, heavy industry such [as] steel and cement manufacturers in the EU will not have to pay for most of their allowances to emit carbon under the trading scheme, unlike other firms taking part. The idea is to protect EU manufacturers and prevent “carbon leakage” — plants being moved to countries which do not have their own trading schemes.
It has emerged that Indian-owned steelmaker Corus, which is closing its Teesside plant, stands to pocket around £250m by selling unused carbon permits. Unions allege that this is why the company does not want to find a buyer for the plant.