Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential impact of the Carbon Border Adjustment Mechanism’s quarterly pricing of fertiliser imports on the stability of the fertiliser market.

The UK Carbon Border Adjustment Mechanism (CBAM) will be introduced from 1 January 2027 and will apply to highly traded, carbon-intensive goods, including fertiliser. The CBAM is designed to mitigate the risk of carbon leakage and ensure that these carbon-intensive imports face a carbon cost that is comparable to that faced by equivalent goods, were they produced in the UK.

The Government expects liabilities arising from the CBAM on fertiliser to be modest in its early years, and for trade flows to remain stable.

The quarterly pricing methodology balances providing certainty for importers with ensuring that the carbon price applied to imports reflects movements in the prevailing UK ETS price. The Government intends to publish illustrative CBAM rates this autumn to help businesses better understand the potential effects of the policy.

A tax information and impacts note can be found at the following link: https://www.gov.uk/government/publications/introduction-of-carbon-border-adjustment-mechanism/carbon-border-adjustment-mechanism#summary-of-impacts