Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate she has made of the potential impact on food prices caused by the proposed Carbon Border Adjustment Mechanism on imported fertiliser for UK agriculture.

The Government does not expect the UK Carbon Border Adjustment Mechanism (CBAM) to have an impact on food prices.

The CBAM will take effect from 1 January 2027. It will ensure that highly traded, carbon intensive goods which are imported into the UK face a comparable carbon price to that which is paid by manufacturers producing the same goods in the UK.

The CBAM rate that is charged on imports will reflect the effective carbon price paid by domestic industries after support mechanisms, such as free allowances within the UK Emissions Trading Scheme, have been taken into account. In recent years, UK-based fertiliser manufacturers have received more free allowances than they needed to surrender to cover their emissions. As such, UK-based fertiliser manufacturers are currently not in practice paying a carbon price.