Lead PI: Prof Ioannis Kyriakou, City St George’s, University of London
Summary:
UK plans to introduce a Carbon Border Adjustment Mechanism to support its decarbonization agenda. This will impose tax on carbon-intensive imports when the carbon price in the country of origin is lower than in the UK, preventing carbon leakage across borders. Further examination points to inflationary impacts, given already high UK inflation. Uncertainties persist around EU–UK carbon prices, imports’ carbon content, and exporters’ reactions. We will model these, examining costs within the supply chain and their influence on consumer prices. We will inform policymakers on balancing decarbonization objectives with inflation control and ensuring consumers are protected from cost impacts.
