Climate crisis: UK ‘carbon border tax’ could reduce emissions and protect business, says former trade secretary Liam Fox

Ahead of the UN’s Cop26 climate summit, to be hosted by the UK in Glasgow, former trade secretary Liam Fox has set out a case for a “carbon border tax” which could force Britain’s trading partners to pay additional levies depending on the environmental impact of their exports to the country.

Dr Fox said such a move would not only reduce emissions but could help protect businesses competing against cheaper imports from countries with less strict climate laws.

A similar tax proposal already outlined by the European Union would, if adopted, apply to high-carbon imports, but the proposition has been received unenthuisastically by countries including the US, China, India and Australia.

As the UK government seeks to cast itself as a climate leader at the coming summit, Dr Fox is urging Britain to take decisive action on the issue.

“For UK and European business, there is an increasing view that the carbon price is now so high it is making them uncompetitive in a global context,” he said.

“Why should they be taking measures to reduce their carbon footprint while high-polluting countries can sell into their markets without these costs?”

Last month John Kerry, Joe Biden’s climate envoy, told the Financial Times such a move would be a last resort.

He said: “[A carbon border tax] does have serious implications for economies, and for relationships, and trade.

“I think it is something that’s more of a last resort, when you’ve exhausted the possibilities of getting emission reductions and joining in some kind of compact by which everybody is bearing the burden.”

Australian trade minister Dan Tehan described the EU plans as resembling a “protectionist” policy, which he told Politico was “like putting shutters around your economy”.

In a speech to the Centre for Policy Studies on Thursday, Dr Fox further outlined his vision for the UK.

He began by explaining how in 2019, after he lost his cabinet position when Boris Johnson became prime minister, he “delved into the literature” on climate science, “to determine for myself whether there was overwhelming evidence for human-driven global warming or whether it was, as some claim, a great global conspiracy”.

Having ascertained that the global climate crisis was not a conspiracy, and that “evidence of climatic change is all around us”, Dr Fox then put forward a template for a carbon border tax.

“The aim is to put an additional price on imports from countries where it is cheaper to pollute, and level the playing field for domestic industries that produce goods with lower levels of greenhouse gas emissions,” he said.

“As a passionate free-trader, I have wrestled with the wider consequences of following a carbon border tax policy. But, as I often repeated as international trade secretary, free trade does not mean a free-for-all.

“As we head towards Cop26 in Glasgow, we must use the opportunity not simply to chair but to lead.”

He then quoted Margaret Thatcher’s 1990 address at the Second World Climate Conference, in which she warned about the threat of global warming affecting future generations – 30 years before Dr Fox investigated whether the climate crisis might be a hoax or not: “No one should underestimate the imagination that will be required, nor the scientific effort, nor the unprecedented cooperation we shall have to show. We shall need statesmanship of a rare order.”