CBAM and UK Carbon Policy: Comparative Analysis

The Carbon Border Adjustment Mechanism (CBAM) and UK carbon policy represent two distinct approaches to carbon pricing and emissions reduction in response to climate change. CBAM, an EU initiative, aims to prevent carbon leakage by imposing a carbon price on imports of certain goods from countries with less stringent climate regulations. This mechanism incentivizes cleaner production globally and levels the playing field for EU industries subject to the EU Emissions Trading System (ETS). In contrast, the UK’s carbon policy, post-Brexit, is characterized by its own Emissions Trading Scheme (UK ETS) and additional measures such as carbon pricing, sector-specific regulations, and support for low-carbon technologies. The UK ETS mimics the EU ETS but allows for more tailored domestic control and ambition aligned with the UK’s net-zero target by 2050. Comparatively, while both CBAM and UK carbon policies aim to reduce emissions and encourage sustainable practices, CBAM focuses on external trade impacts and global carbon pricing harmonization, whereas the UK policy centers on domestic emissions control with trade considerations addressed through separate mechanisms. The interaction between CBAM and UK policy will be crucial for trade relations and carbon market alignment, influencing global efforts towards decarbonization.