MPA deeply disappointed at lack of UK Government announcement on CBAM

The Mineral Products Association (MPA) is deeply disappointed by the lack of commitment to a UK Carbon Border Adjustment Mechanism (CBAM) in today's Autumn Statement. This missed opportunity should be urgently followed by the publication of the promised consultation response announcing the introduction of a CBAM, says the Association.
November 22, 2023
By Guy Woodford
The MPA is deeply disappointed by the lack of commitment to a UK Carbon Border Adjustment Mechanism (CBAM) in today's Autumn Statement. Pic: MPA

The MPA continued: "Failure to take this opportunity to demonstrate support for energy-intensive industries – including cement – adds further uncertainty to the creation of a level playing field on carbon cost with overseas competitors, putting at risk domestic production and long-term investment in decarbonisation.

"The UK cement and concrete sector – represented by the MPA - provides a secure, domestic supply of essential materials to build the infrastructure needed for a low carbon future, makes a vital contribution to UK GVA and supports skilled jobs across the country.

"However, higher energy costs and historically higher carbon costs compared to international competitors are undermining UK cement production. This is contributing to an increasing share of the UK cement market being supplied from other countries that do not account for its carbon impact."

The MPA has been calling for a CBAM covering cement to equalise carbon costs between domestic producers and imports. Maintaining fair competition for UK plants is, the MPA argues, essential to ensure a reliable source of domestically produced cement and avoid the challenges associated with international trading markets. "A well-designed, watertight CBAM can help maintain a level playing field with international competitors and reduce the risk of carbon leakage to countries with less onerous climate policies," the MPA notes.

Dr Diana Casey
Dr Diana Casey, MPA Executive Director for Energy and Climate Change. Pic: MPA

The MPA says that a UK CBAM has also become more urgent following the establishment of the EU CBAM and its full implementation in 2026. The Association believes this creates a risk of significant volumes of imports that currently go into the EU from non-EU producers without effective carbon pricing being diverted to the UK unless a similar mechanism is put in place.

Dr Diana Casey, MPA's Executive Director for Energy and Climate Change, said: "The delay in committing to a CBAM sends the signal that the UK is not the place to invest. Cement is essential to our everyday lives. The construction of our homes, hospitals, offices and much more depend on it. We cannot take its supply for granted and neither can we put ourselves at risk of unstable international trading markets. Levelling the carbon cost between domestic production and imports is vital to attract the investment required to decarbonise and ensure our long-term security of supply. The UK Government must urgently commit to a CBAM on cement."

Other construction and mineral products sector reactions to Chancellor Jeremy Hunt's Autumn Statement to a packed House of Commons included the thoughts of Suneeta Johal, CEO of the Construction Equipment Association (CEA).

She said: "The recent Autumn Statement by Chancellor Jeremy Hunt represents a thoughtful and strategic approach, acknowledging the necessities of the industry and introducing a forward-looking strategy to enhance investment. This statement marks a positive development, especially for the manufacturing sector, which values the emphasis on resolving enduring economic issues. The decision to make full expensing permanent provides the clarity and stability businesses require for their investment decisions. 

Suneeta Johal
Suneeta Johal, CEO of the Construction Equipment Association (CEA). Pic: CEA

"Additionally, the new initiatives to improve engineering apprenticeships and advance manufacturing signify a proactive effort to develop high-value growth and skilled employment, shaping a robust future economy. 

"The Chancellor’s commitment to making the full expensing policy a permanent fixture is a landmark achievement. The ability for companies to claim 100% capital allowances on qualifying plant and machinery investments and write off the cost of investment in one go is not just a financial boon; it's a catalyst for accelerated growth and modernisation. 

"This significant policy change, a result of concerted efforts by MAKE UK, CBI and the Construction Equipment Association alongside over 200 organisations, stands as an example of the powerful outcomes that can be achieved through collaborative industry-government engagement. 

"However, the absence of discussion on fuel duty is particularly disappointing. In an industry where fuel costs substantially impact operations, this oversight is a missed opportunity." 

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