Carbon border tax would reduce emissions and boost UK economy, think tank says

Centre for Policy Studies suggests such a tax would protect British businesses from competition with countries which have less rigorous controls on emissions

The Centre for Policy Studies is calling for the creation of a carbon border tax on energy intensive imports to stop the 'export’ of pollution (Getty Images)

A carbon border tax, in which importers pay duty on goods dependent on their carbon footprint, will help reduce pollution and level up the economy, an influential think tank has said.

According to the Centre for Policy Studies – a right-wing think tank which focuses on free market policies – a carbon border tax on energy intensive imports would see importers from outside of the UK "put on a level playing field with British businesses", they say this would help support the economies in many of the same areas the government wants to "level up".

The tax would work as a deterrent for importers to sell certain goods in the UK, and the European Union has previously suggested a similar structure for imports into the bloc.

The Centre For Policy Studies report suggests that as the UK government moves to reduce the emissions of heavy industry in Britain, the economic burden placed on companies could rapidly make foreign-made goods more competitive.

The report is backed by Alexander Stafford the MP for Rother Valley in South Yorkshire, and proposes a range of policies which the think tank said would help the government achieve its aims of "levelling up" and reaching net zero emissions.

The report’s authors said: "A carbon border tax [will] ensure that net zero does not leave those industries at the heart of many communities vulnerable to foreign competitors who are not subject to the same environmental standards".

The think tank is also called for a major policy programme to support the transition to a cleaner economy, including tax breaks for decarbonisation processes, the expansion of carbon pricing into agriculture, transport, and heating, expanding skills programmes such as apprenticeships to allow more people to work in "clean jobs", increase investment in clean technology research in areas such as energy and agriculture, adopt a carbon border tax, and "fund a bold new programme of technical universities", which they said would help "equip workers for precisely the sorts of green jobs which will form the future green economy".

Mr Stafford, who is a member of the Business, Energy and Industrial Strategy Committee said: “There’s no path to net zero that doesn’t run through this country’s industrial heartlands and that doesn’t involve reindustrialisation by new means.

"Business and enterprise will drive innovation and technological solutions – let’s unleash that potential and build the future with the pride of our past.”

Eamonn Ives, the head of energy and environment at the Centre for Policy Studies said: “Having just hosted Cop26, it is now time to get on with the next phase of decarbonising Britain’s economy. But at the same time, progress must be made on the government’s levelling up agenda.

"By tackling emissions from challenging sectors such as steel production or other industrial activities in the right way, these two goals are not just compatible but complementary. The package of policies mapped out in our report will help put Britain at the forefront of the global net zero realignment while providing a boost to the UK regions that need it most.”

The calls for a carbon border tax come eight months after similar calls from former trade secretary Liam Fox.

Last year, Dr Fox said: “Why should [UK and EU businesses] be taking measures to reduce their carbon footprint while high-polluting countries can sell into their markets without these costs?”

At the time the policy suggestion was met with a lukewarm response from the US, with John Kerry saying such a policy should be a "last resort", and with open hostility from Australia, with ministers saying it was "like putting shutters around your economy".