The UK's transition to a low-carbon economy requires significant carbon reduction efforts from domestic industries. However, imported goods with embedded carbon emissions may be subject to different carbon pricing than domestic goods, leading to trade distortions and potential disadvantages for UK industries. This could hinder the UK's efforts to reduce carbon emissions and contribute to global efforts to combat climate change.

28. The UK Government should design and implement a UK Carbon Border Adjustment Mechanism (CBAM) that aligns with the EU CBAM scheme, ensuring consistency in the treatment of imported goods with embedded carbon emissions and reducing the reporting requirements needed to cooperate with the EU effectively.

29. The UK Government should implement efficient reporting and monitoring systems for the UK CBAM and periodically review and update the UK CBAM in line with the EU scheme to reflect developments in carbon pricing, international trade, and climate policy.

30. The UK should therefore engage in ongoing dialogue and cooperation with the EU and other international partners to monitor the effectiveness of carbon border adjustments and address any emerging challenges or opportunities.