Goods imported into the UK from countries with a lower or no carbon price will face a levy by 2027.
By Paul A. Davies, Michael D. Green, and James Bee
On 18 December 2023, the UK government announced a proposal for a new carbon border adjustment mechanism (UK CBAM). The announcement follows extensive consultation earlier this year on possible measures to mitigate carbon leakage risks and aims to support the UK’s decarbonisation efforts.
The UK has made a number of decarbonisation commitments including reaching net zero by 2050. These commitments to decarbonise can be undermined by “carbon leakage”, in which production of goods and associated emissions move from a jurisdiction with more ambitious climate policies (which add costs to carbon-intensive processes) to another jurisdiction with less ambitious policies, resulting in an overall negative impact on the carbon intensity of the processes/goods themselves. The UK CBAM (or other form of carbon tax) seeks to address this issue by aiming to put a fair price on the carbon emitted during the production of certain carbon-intensive goods entering the UK.
At the 25th annual Conference of Parties (COP 25) United Nations Climate Summit, held in December 2019 in Madrid, non-governmental organizations (NGOs) and other groups submitted reports and studies on the latest developments in environmental technology. Several organizations, including the Innovation for Cool Earth Forum, the Global CCS Institute, and the National Petroleum Council of the United States, submitted reports on the use and future development of carbon capture, use, and storage (CCUS) technologies.
Senate Bill 100, signed into law by Governor Jerry Brown on September 10, 2018, aims to raise California’s already ambitious renewable energy standards by 2030, with an ultimate mandate of 100% clean energy by 2045. On the same day, Brown issued Executive Order B-55-18, which sets a target of
In December 2015, world leaders met to negotiate the Paris Agreement. Setting aside whether the Paris Agreement goes too far, not far enough or is just right, one cannot dispute that government commitments to limit an increase in the global average temperature to well below two degrees Celsius will almost certainly impact private equity funds. In particular, regulatory and investor demand are likely to change the way climate-related risks are assessed. As Blackrock notes, “…carbon-heavy industries are not immune from disruption, nor are asset prices from regulatory efforts to mitigate climate change risk. We believe investors should thoughtfully consider these dynamics in order to build sustainable portfolios and take advantage of investment opportunities as we move towards a low-carbon economy”.