Written evidence submitted by Professor David Tyfield and Dr Andy Yuille (Lancaster University) and Professor Matthew Cotton and Dr Nicholas Gray (Teesside University), all in personal capacity, to the Environmental Audit Committee: Inquiry on carbon border adjustment mechanism

Andy Yuille, David Tyfield, Matthew Cotton, Nicholas Gray

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Abstract

• In March this year the Government designated 8 new Freeports in England, one of its flagship policies to drive regional economic growth, international trade, and innovation.
• Businesses operating within Freeport sites benefit from reduced tariffs, business rates, and national insurance contributions; alongside simplified customs, planning and data processing requirements.
• A carbon border adjustment mechanism (CBAM), or equivalent measure, appears necessary to drive the decarbonisation of international supply chains.
• There is likely to be both local and national resistance to applying a CBAM in Freeports, as project success is based on their exemption from normal import tariffs and customs procedures
• If a CBAM is introduced to the UK, but Freeports are exempt, this generates a high risk of additional carbon leakage, with Freeports actively undermining progress towards net zero policy commitments.
• Simplified regulatory requirements within Freeport zones may make the application of a CBAM more difficult even if they are not directly exempt.
• We recommend that a CBAM is introduced to the UK, that it applies equally in designated Freeports, and that measures are put in place to ensure effective enforcement on Freeport sites
• This may require a rebranding and redirection of the Freeport initiative to become “CarbonFreePorts”, where distinct advantages for trade and industry remain in place but with the emphasis shifted from low tax and regulation to different tax and regulation, incorporating specific incentives on low-carbon industry, innovation and mobility.
Original languageEnglish
TypeWritten evidence
Number of pages6
Publication statusPublished - 19 Oct 2021

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