UK Steel has today warned that almost 23 million tonnes of non-EU steel could flood the UK market, if the UK fails to introduce its own Carbon Border Adjustment Mechanism (CBAM) at the same time as the EU. The steel trade association says that the UK Government must act swiftly to avoid crushing the UK steel industry when the EU brings in new import carbon costs in 2026.

The Government has today closed its consultation on a UK CBAM. UK Steel’s new stats expose how 23 million tonnes (Mt) of steel currently imported into the EU could be diverted from Europe and onto the UK market when the EU’s CBAM is put in place, if there is no UK equivalent in place. The UK’s consumes only 9Mt of steel, meaning any imported, cheap and high-emission steel will be stacked in stock yards, undercutting local costs and devastating the domestic industry.

The main aim of a CBAM policy is to create a market for low-emission steel and help the industry decarbonise. Imported steel can undercut domestic production simply because most nations do not apply the high carbon costs to their steel industry.

The second blow would come from the restrictions to exports, as 75% of the UK steel industry’s exports totalling 2.55Mt of steel (£3.5bn in value) goes to European markets. This could face a trade barrier from the European CBAM from 2026, unless the UK moves forwards with its own UK CBAM.

By implementing its own Carbon Border Adjustment Mechanism, the UK removes a trade barrier to the steel industry’s biggest market, stops the risk of trade diversion in its tracks, and creates a market for low-carbon steel vital for UK plc’s Net Zero transition.

Gareth Stace, Director General of UK Steel, said:

“Over three times our annual steel consumption is at risk of being diverted from the EU to open markets like the UK, which could suffocate our domestic industry. By not acting now UK government will burst the dam, when high-emission, cheap steel floods the UK market while ruining our export opportunities at the same time.

“We need a UK Carbon Border Adjustment Mechanism to level the playing field on carbon costs across local and international suppliers. By having a competitive domestic steel industry, the UK can lead the way to Net Zero steelmaking. Steel is vital to the UK’s economic resilience, jobs and hitting Net Zero targets for the wider economy, and integral to green tech, transport and future housing.”