The Carbon Border Adjustment Mechanism (Calculation of CBAM Rate and Determination of Carbon Price Relief) Regulations 2026

Pippa Heylings Excerpts

Monday 12th October 2026 General Committees

[Pippa Heylings (South Cambridgeshire) (LD)]

We Liberal Democrats support the carbon border adjustment mechanism. We have long supported action to support businesses, create incentives to prevent carbon leakage and ensure that the transition to net zero is both environmentally effective and economically fair. That is particularly important for farmers and agriculture, especially after the summer of extreme heat that we have just seen. Over the past five years, farmers have seen the worst three harvests on record, so tackling climate change is at the top of their mind. They are acutely aware; they are long-term planners and they know that we have to do what we can.

That point brings me to our two concerns about the Government’s decision to introduce the regulations in this way and at this moment. First, we are concerned by the inclusion of fertilisers without confirmation of the rate. That risks imposing substantial additional costs on a sector that is already under immense cumulative financial pressure. In the context of prolonged conflict in the middle east and the closure of the strait of Hormuz, as well as the climate change pressures that I have mentioned, farmers are facing rising costs, volatile incomes and significant uncertainty.

[John Lamont]

The hon. Lady is right to identify the big challenges that farmers are facing. The last thing they need is up to £70 or £80 a tonne being added to the cost of fertiliser. Surely the Liberal Democrats should oppose the regulations until we get some clarity from the Government as to what the financial impact will be.

[Pippa Heylings]

That is exactly the point that I am raising, which is about uncertainty. The National Farmers’ Union has estimated exactly that cost, which will ultimately be borne by British farmers. At a time when they face such volatility and uncertainty, we should be strengthening our food security, not undermining it. We would like the Government first to tell farmers what that rate would be.

[Robbie Moore (Keighley and Ilkley) (Con)]

Will the hon. Lady give way?

[Pippa Heylings]

I will continue. We would also like the Government, potentially, to introduce a temporary derogation for imported fertilisers.

Unlike Conservative colleagues, we have a second concern about the slow progress in linking the UK and EU emissions trading schemes. Without that linkage, the UK CBAM will be more complex, more administratively burdensome and more costly than it needs to be. Businesses trading with our largest trading partner should not be forced to navigate unnecessary layers of bureaucracy because the Government have failed to make progress in this area. A linked UK-EU carbon market would make the system simpler, more efficient and more effective, so we call on the Minister to make securing ETS linkage with the European Union an urgent priority at the upcoming UK-EU reset meeting.

These are not objections to the principle of the carbon border adjustment mechanism. They are practical questions and improvements that would make the policy fairer for British farmers, less burdensome for British businesses and more effective in achieving its environmental objectives. If the Government want the mechanism to succeed, will they please ensure that it supports our climate ambitions and the long-term competitiveness of British agriculture and industry?

--- Later in debate ---

[Robbie Moore]

The Conservatives are clear that we will vote against the implementation of the CBAM. We are against the increase in costs associated with this tax on our fertiliser. A level playing field must be generated, but that is not what this legislation will implement.

[Pippa Heylings]

Certainty!

[The Chair]

Order.