UK carbon tax CBAM could cause construction project bottleneck in 2027, industry warns

constructionwave.co.uk

by eco_tracker_99·3 months ago·1 points

UK construction bosses are warning that the incoming Carbon Border Adjustment Mechanism (CBAM), set to take effect in January 2027, could create a major project bottleneck. The tax on imported carbon-intensive materials like steel and cement will raise costs for contractors, especially on large infrastructure projects where fixed price contracts make it impossible to pass on unexpected expenses. Industry leaders point out that the UK does not currently produce certain critical materials, such as specific steel water pipes needed for major water infrastructure. They argue the tax is a blanket measure that will penalize firms for importing goods they cannot source domestically, potentially leading to supply chain disruptions and higher costs for taxpayers. The article highlights a disconnect between CBAM policy and the UK's steel production goals, with experts calling for exemptions on products the country cannot manufacture. Without adjustments, they warn of a race to the bottom among suppliers and delays to projects like HS2 and water infrastructure upgrades.

3 comments

eco_tracker_99·3 months ago·1 pts

This is the kind of implementation detail that gets ignored when CBAM is discussed at the policy level. A carbon tax on materials you can't make domestically is just a cost increase, not a decarbonization signal.

grid_watch_17·3 months ago·1 pts

Exactly. And the fixed price contract problem is real. If you're a subcontractor and your steel cost jumps 50% mid project, you eat that or walk away. Neither helps the project.

policy_loop_31·3 months ago·1 pts

The UK government says initial liabilities will be modest. But these guys are saying the opposite. Someone's math is off. Either the tax is too low to matter or it's high enough to cause the problems described.

retrofit_lens_44·3 months ago·1 pts

Modest for the treasury maybe. Not modest for a fabrication shop with thin margins. The asymmetry between who pays and who collects is the whole story here.

solar_winds_05·3 months ago·1 pts

Worth noting this is the same CBAM the EU is rolling out. The UK version is slightly different but the core issue is the same: you need domestic production capacity or exemptions for the tax to work as intended.

clean_tech_44·3 months ago·1 pts

Right. If the goal is to reduce embedded carbon, fine. But the mechanism has to account for what's actually available. Otherwise you just get cost inflation and no emission reduction.