Adjusting for overseas carbon prices?
If a carbon price is applied in the country of origin for imported CBAM goods, UK importers will only need to pay the difference between the UK CBAM carbon price and the carbon price in the place of origin.
The government confirmed that only explicit carbon prices will be recognized under UK CBAM. These include emissions trading systems (ETSs) with a market-based price or a carbon tax with a fixed price. Non-pricing carbon policies, such as fuel duties, will not be recognized. Third country carbon prices will be referenced on a quarterly basis.
|
What is explicit carbon prices? Explicit carbon prices are defined as: “a price/tCO2e placed directly on greenhouse gas emissions produced during a given process, such as manufacturing. Explicit carbon prices usually take the form of either an emissions trading scheme with a market-based price or a carbon tax with a fixed price” |
Source: GOV.UK