Climate Change: Trade Policy

Lord Oates Excerpts

Thursday 28th October 2021 Lords Chamber

[Lord Grimstone of Boscobel (Con)]

My Lords, as we transition to net zero, of course the UK recognises the importance of addressing the risk of carbon leakage to ensure that our ambitious policy of decarbonisation is not undermined. We have ambitious carbon pricing through our emissions trading schemes, and we have committed to review this to ensure that it is consistent with our net-zero pathway and carbon priceable mechanisms.

[Lord Oates (LD)]

My Lords, does the Minister recognise that as the UK has decarbonised its domestic economy, we have dramatically increased our trade-embedded emissions from under 12% in 1990 to over 42% today? The Net Zero Review blandly states that a case for conducting a formal call for evidence into a carbon border adjustment mechanism “may emerge”. Do these figures not demonstrate that the case is clear, compelling and should be acted on now?

[Lord Grimstone of Boscobel (Con)]

My Lords, internationally, we believe that the first step is to use climate diplomacy to encourage our trading partners to ambitiously mitigate climate change in co-ordination with each other for this very reason: to reduce the leakage risk across economies. But the noble Lord makes a point, and we will also consider of course the full range of options to address the risk of carbon leakage, including by seeking opportunities at the relevant international level.