A carbon border tax is essential to prevent the ‘offshoring’ of emissions

There have been many reports about the end of globalisation over the past year or two, yet the reality is that UK construction projects are highly reliant on long and often complex global supply chains for materials.

International building design trends often mean that materials need to be sourced from other countries. Market forces also dictate that, in the UK, we import around 26% of our cement despite having a thriving cement industry and access to indigenous minerals. Imports account for around 81% of timber and 60% of steel in the UK too.

Emissions targets can be met – or partially met – by buying more imported goods in place of domestic production

Despite the UK’s drive to decarbonise, there is currently a significant shortcoming in UK net zero legislation because emissions targets can be met – or partially met – by buying more imported goods in place of domestic production. This simply moves responsibility for emissions to other countries.

The reality is that emissions from imported products across many parts of our economy – including construction materials – have effectively been “offshored”, leaving the problem largely out of sight and out of mind.

As well as the environmental impact of this, the risk of carbon leakage – where businesses move production to other countries with laxer emission constraints – should be a significant concern. This is because UK manufacturers face a double whammy of unequal carbon pricing across borders and domestic energy prices that are some of the most expensive in Europe.

>> Also read: We are running out of materials – and of time to do something about it

>> Also read: Building The Future Commission: the energy and net zero stream

If not tackled, this could see more construction material production move outside the UK, resulting in a loss of manufacturing jobs, uncertainty of security of supply and an increase in overall global emissions.

This threat is at least recognised by the UK government and a consultation has been launched into carbon leakage mitigation measures, including a UK carbon border adjustment mechanism (CBAM) and mandatory product standards.

A CBAM would help to create a level playing field so that importers face the same carbon cost as domestic manufacturers of construction materials. It could put a fair price on the emissions produced during the manufacture of carbon-intensive goods that enter the UK and help to encourage cleaner industrial production in exporting countries.

Action is urgently needed now to reduce the risk of carbon leakage, protect jobs and help the UK to remain competitive

The UK is lagging behind on this because the EU has already taken action and implemented its own CBAM, which will start with a reporting phase this year. Charges will begin to be levied in 2026. The CBAM will initially apply to goods that are at most significant risk of carbon leakage, namely cement, steel, iron, aluminium, fertilisers and electricity.

While the UK government’s consultation is welcome, action is urgently needed now to reduce the risk of carbon leakage, protect jobs and help the UK to remain competitive. Critically, the UK must provide an honest account of its progress towards net zero.

This means taking responsibility for emissions from both materials and goods produced domestically, as well as those production emissions from foreign imports. A failure to do this will undermine government’s commitment to tackle climate change and the credibility of domestic action in the fight to reduce emissions.

What does this mean for construction? If the CBAM is introduced, it will mean increased border costs for imported construction materials.

While the prescriptive list of products is yet to be defined, we can expect that it will follow the EU’s lead with carbon-intensive products. It is likely that the UK and EU will collaborate on the two respective schemes and Rishi Sunak has indicated that there may be opportunities for further cooperation with the EU.

The green lining to all of this is that the CBAM would undoubtedly focus minds about carbon miles and the environmental impact of all materials. Across UK construction, there is still not enough of a focus on where all materials come from – and a lack of decision-making based on carbon lifecycles.

There are clear net zero benefits. Greater levels of transparency and data about materials and supply chains are required to help clients, contractors and material providers to start to focus on their scope 3 emissions – those that an organisation is indirectly responsible for, up and down its value chain.

We may be entering an era of greater regionalisation of trade which will require businesses to really look at carbon across borders as well as production processes

Having understood scope 1 and 2 emissions, many clients and contractors are grappling with the scope 3 challenge and how to develop comprehensive strategies. Looking at carbon across borders and responsible sourcing practices will be essential.

>> Also read: We all need to get a move on to tackle scope 3 emissions

Will we see more regionalised supply chains? This is not, in my view, the end of globalisation but we may be entering an era of greater regionalisation of trade which will require businesses to really look at carbon across borders as well as production processes. Of course, the potential rise of shorter supply chains will not just be driven by carbon because, as we have seen with other goods, geopolitical risk will also remain a factor in decision making.

A UK CBAM could be an important next step towards taking fuller responsibility for emissions on the transition to net zero. It would help to maintain the competitiveness of UK manufacturing of construction materials like cement and, importantly for construction, it will require greater scrutiny of where essential materials come from.

Dr Diana Casey is cement, energy and climate change director at the Mineral Products Association