According to a report by the Financial Times, the UK is planning to propose a carbon border tax that would place a levy on imported steel.

The tax would be part of a £600m support package to help Britain’s two biggest steelmakers invest in greener technologies and avert ‘the loss of thousands of jobs’.

Jeremy Hunt, UK chancellor, has agreed to consult on ways to level the playing field for British Steel and Tata Steel UK against global competitors which face advantages such as lower environmental standards or lower operating costs. One option would be the introduction of a carbon border adjustment mechanism, similar to the one agreed by the EU last year, that will force importers to cover the cost of the carbon emissions of the foreign steel, said two people familiar with the situation.

Hunt has also agreed to offer ‘bespoke aid’ for the steel industry on its electricity bills beyond what the Treasury announced for industry earlier this month, the same people confirmed. The assistance will include compensation for a number of existing levies that will help to reduce the electricity price disparity UK steelmakers face against European competitors.

More than 4,000 jobs are at stake at Tata Steel’s Port Talbot site in Wales and another 4,000 at British Steel, most of them at a site in Scunthorpe, with thousands more at risk in the supply chain. Jingye, the Chinese owner of British Steel, has warned that it will be forced to close one of its two blast furnaces and import steel from China to be processed at the company’s UK sites if it does not receive government aid.

Source: Financial Times