Connect with us

Published

on

UK reveals carbon border tax mechanism

Britain is gearing up to impose a carbon tax on imported goods in a move announced by the Treasury aimed at safeguarding UK firms against being outcompeted by foreign manufacturers.

The proposed tax, also called the Carbon Border Adjustment Mechanism (CBAM) is set to take effect in 2027. It aims to ensure that imports like iron, steel, aluminum, ceramics, and cement face a similar carbon price to domestic goods. The move intends to maintain fairness in the market.

What is the UK CBAM?

Governments use a carbon price as a tool to curb emissions by imposing charges on carbon pollution. The goal is to encourage industries to reduce their greenhouse gas emissions.

Chancellor Jeremy Hunt highlighted the role of their British CBAM version, saying:

“This levy will make sure carbon-intensive products from overseas — like steel and ceramics — face a comparable carbon price to those produced in the UK so that our decarbonization efforts translate into reductions in global emissions.”

The UK government noted the new tax would help address “carbon leakage” which has become more pressing. This means avoiding emissions being displaced to other countries that have lower or no carbon pricing mechanisms in place. 

The CBAM will work hand-in-hand with the UK Emissions Trading Scheme. It’s the same as how the EU’s CBAM functions in parallel with the EU’s ETS. 

According to the Treasury, these plans will help level the playing field and encourage greater investment in net zero efforts. 

Under the proposed CBAM, charges will be determined based on the volume of carbon emissions produced during product manufacturing. The difference between the carbon price applied in the country of origin and that paid by comparable UK manufacturers will also influence these charges.

how UK CBAM works

What Emissions Scope is Covered? 

The importer of imported products covered by the UK CBAM will be liable for the tax based on the products’ embodied emissions. It will not include the trading of emissions certificates.

The emissions scope categories that would be under CBAM are as follows:

UK CBAM emissions scope coverage

The UK CBAM will also extend its coverage to Scope 1, Scope 2, and specific precursor product emissions found in imported products. This extension aims to align with the coverage provided by the UK ETS.

The UK ETS is designed to regulate and put a price on GHG emissions produced by domestic industries. Operating on a cap-and-trade mechanism, this system allows the market to determine the value of emission allowances. The total carbon emissions allowed and the corresponding allowances are capped under this scheme, gradually decreasing over time.

As part of the strategy to address the risk of carbon leakage within sectors covered by the UK ETS, a segment of UK ETS allowances (UKAs) is allocated to operators in exposed sectors without charge. This allocation ensures that certain operators receive allowances for free, thereby reducing their exposure to the carbon price. 

However, this measure also retains the economic motivation for these operators to invest in decarbonization initiatives. Thus, it maintains the overall emissions cap across the sectors included in the ETS.

Closing Carbon Loopholes

Following a consultation on solutions for carbon leakage, the Treasury reported that 85% of respondents identified the issue as a present or future risk to their efforts in achieving decarbonization.

There’s a growing concern that while companies in the UK work towards reducing GHGs, equivalent efforts are not mirrored abroad. This gap may result in emissions merely shifting to countries without ambitious net zero targets, providing limited global environmental benefits.

To address these concerns, implementing a suitable carbon price like CBAM is considered a significant step to mitigate carbon loopholes.

The Treasury plans to engage in further consultations in 2024 concerning the levy’s specifics. These include its design, implementation, and the comprehensive list of goods and products subject to the levy. 

Moreover, it seeks input from various sectors, including power, aviation, and industry, regarding the UK Emissions Trading Scheme.

The Chairman of the Environmental Audit Committee emphasized the necessity of addressing emissions associated with imports, constituting 43% of the UK’s consumption emissions. This is to prevent undermining the UK’s decarbonization efforts. 

Implementing an appropriate carbon price at the border will play a crucial role in closing carbon loopholes.

The UK’s introduction of the carbon tax marks a significant step toward aligning carbon pricing and ensuring fairness in global markets. By covering a wide scope of emissions, the CBAM intends to close carbon loopholes, encouraging industries to invest in net zero efforts and supporting the nation’s decarbonization journey.

The post UK Reveals Move for a Carbon Border Tax in 2027 appeared first on Carbon Credits.

Continue Reading

Carbon Footprint

The Strategic Case for Nature-Based Carbon Investments

Published

on

Nature-based carbon investments deserve consideration when they address a specific business dependency and produce outcomes you can measure. Imagine Moonbucks, a global coffee roaster planning next season’s espresso blend. It is considering natural Grade 4 coffee from Jimma, in southwestern Oromia, Ethiopia. Its sourcing decisions affect the roasting schedule and the cash tied up in coffee purchases. Moonbucks needs to understand which measures could protect that supply, what they would cost and how it would judge the results.

1. Define the sourcing problem before choosing a project

Moonbucks needs a dependable component for its espresso blend. Its procurement team wants continuity of volume and an agreed cup profile. Replacing a shipment at short notice could require new sample approval and changes to the blend, and given the schedules for cultivation, processing, and freight delivery, is practically impossible. Moonbucks needs to get this right, and its initial concern is inconsistent deliveries. It commissions an assessment of the supplying farms and post-harvest chain. The questions cover land condition, harvest availability and whether drying or storage problems are affecting saleable lots.

This distinction changes the investment brief. A tree-planting proposal cannot be assumed to fix drying problems. Better storage cannot restore eroded land. The team must establish which problem exists before selecting the response.

CCC’s guide to finding nature-based solutions in your supply chain explains where to look. Here, the next task is to turn a broad concern into a testable proposal.

2. Develop nature-based carbon investments around the actual supply chain

The assessment would trace Moonbucks’ purchases back through the exporter and supplying producer groups. Which farms supply the contracted lots? Who controls land-management decisions? How long does the buyer expect to maintain the purchasing relationship?

Furthermore, Jimma natural Grade 4 cannot be treated as interchangeable with every Ethiopian coffee. Moonbucks would need to test any substitute against its own blend and quality requirements.

Suppose Moonbucks’ assessment identifies an opportunity to maintain shade trees and restore vegetation along exposed streambanks. The IPCC describes agroforestry as a way to store carbon in vegetation and soil, with potential benefits for erosion control and water quality.1 Moonbucks would need local advice on species, growing conditions and maintenance before deciding how these measures fit its sourcing plan.

The proposal now has a defined sourcing connection and a candidate intervention. The next steps are to test its effect on production, assess carbon eligibility and build the financial case.

3. Compare the proposal with other ways to protect supply

WBCSD’s Nature-based Solutions Blueprint recommends comparing nature-based options with other responses across their benefits and costs.2 For Moonbucks, that means evaluating the landscape proposal alongside drying improvements, storage controls and alternative sourcing arrangements.

The product’s natural-process designation matters. Moonbucks should examine the drying and dry-milling chain alongside land conditions. Its team would check storage practices, contamination risks and incoming-lot quality to see whether problems arise before or after the coffee leaves the farms.

The revised proposal might combine land stewardship with separate post-harvest controls. Each component needs its own purpose and budget. A sustainability label should not obscure which activity is expected to solve which problem.

The project develops as the evidence improves. Its scope should follow the diagnosis rather than preserve the first idea unchanged.

4. Establish what the carbon outcome could count toward

Moonbucks’ sustainability team now tests the proposed carbon case separately from the sourcing case. Is the objective a measurable change in Moonbucks’ value-chain emissions, verified credits for separate voluntary use, or distinct outcomes under carefully defined arrangements?

Scope 3 covers value-chain emissions. A purchasing relationship alone does not prove that a farm intervention can be included in Moonbucks’ inventory. The team needs an applicable accounting method, defensible boundaries and evidence supporting attribution.

SBTi’s FLAG Guidance (forest, land and agriculture), version 1.2, says purchased credits used as offsets cannot meet near-term FLAG or energy and industry targets. Eligible land-based removals are subject to accounting requirements.3 Moonbucks needs to test its proposal against those rules before including an outcome in its targets.

For Moonbucks’ Jimma proposal, maintaining existing trees and establishing new vegetation could involve different carbon questions. Specialists must examine the baseline and additionality, meaning what changes because the project proceeds. They must also assess measurement and the risk that stored carbon is lost. CCC’s MRV and additionality article introduces those tests.

Until that work is complete, Moonbucks should not budget an assumed Scope 3 reduction or credit-sale receipt. Direct emissions reductions remain the priority.

5. Build a financial case that survives weaker assumptions

Moonbucks’ finance team would now build a multi-year budget. UNEP’s State of Finance for Nature 2023 compares current finance with the investment needed to meet climate, biodiversity and land-restoration goals.4 The company would cost its proposed activities, farmer participation and ongoing monitoring. Verification, where required, is a separate expense. Maintenance and responsibility for replacing failed plantings must remain visible after the initial establishment budget ends.

Operational benefits need equally careful treatment. If fewer rejected lots reduce emergency purchasing, count that saving once. Do not add “supply resilience” as another financial benefit when it represents the same avoided cost.

Moonbucks should compare a base case with slower benefits, higher implementation costs and no carbon revenue. It should also distinguish production outcomes from quality and shipment outcomes. A single good harvest would not prove that the landscape intervention caused better delivery performance.

A project can remain worth funding even when its carbon case needs more work. That decision must rest on the operational evidence and the company’s objectives, without unsupported environmental claims.

6. Fund a pilot with a clear expansion decision

Moonbucks’ first approval would fund a bounded pilot, rather than commit the entire sourcing program. Before spending, Moonbucks would agree on participating farms, responsibilities and the evidence needed at review.

Its scorecard could track farmer participation, implementation costs and plant survival, alongside accepted coffee volumes and lot-quality results. Carbon measurements would follow the selected method. Farm-level traceability must connect the intervention to the actual sourcing relationship.

Suppose Moonbucks’ review later finds that storage changes explain most quality improvements, while the land measures need longer observation. Those findings would shape the next decision: expand the proven component, adjust the landscape work or pause further spending. They would not justify crediting all improvements to tree planting.

This gives nature-based carbon investments a practical place in a multi-year strategy. Funding increases as the evidence supports it, and the project can change direction before a larger commitment.

Discuss a sourcing opportunity with CCC

Carbon Credit Capital’s nature-based supply-chain investment service uses its Dual-Value Model to examine supply-chain economics alongside potential sustainability outcomes.

Schedule a consultation to discuss your sourcing exposure and the questions to resolve before allocating capital.

Sources

  1. Intergovernmental Panel on Climate Change (IPCC), Climate Change 2022: Mitigation of Climate Change, Chapter 7, Agriculture, Forestry and Other Land Uses, section 7.4.3.3 (Agroforestry).
  2. World Business Council for Sustainable Development (WBCSD), Nature-based Solutions Blueprint, 5 June 2024.
  3. Science Based Targets initiative (SBTi), Forest, Land and Agriculture Science-Based Target-Setting Guidance, version 1.2, March 2026, section 3.1.4, pp. 37–38.
  4. United Nations Environment Programme (UNEP), State of Finance for Nature 2023, 2023.
Continue Reading

Carbon Footprint

How to buy plastic credits, and what to check before you do

Published

on

A plastic credit funds the collection of plastic waste in places where no formal system exists to collect it. Each credit represents a measured, independently audited quantity of plastic taken out of the environment or returned to use, tracked on a public registry.

Continue Reading

Carbon Footprint

EU carbon credit claims after 27 September 2026

Published

on

EU carbon credit claims changed on 27 September 2026, the day the Directive (EU) 2024/825 began to apply across the European Union. The change is narrow. It changes how a company can talk about the credits it buys. A product can no longer be called neutral on the strength of compensation alone; however, every specific, evidenced statement about what a company measured, reduced, and funded stays fully available.

Continue Reading

Trending

Copyright © 2022 BreakingClimateChange.com