UK Refining Faces CBAM Pressure
Fuels Industry UK, the trade body representing UK fuel suppliers, has warned that the absence of a domestic Carbon Border Adjustment Mechanism (CBAM) could undermine the country’s energy security and accelerate the decline of its refining sector.
The comments were made in response to the Government’s focus on energy independence and industrial resilience highlighted in the King’s Speech. The industry group argued that without carbon border protection, UK refineries risk being undercut by higher-carbon imported fuels, potentially shifting production overseas and weakening domestic supply resilience.
Elizabeth de Jong, Chief Executive of Fuels Industry UK, said the Government’s focus on energy security is not being applied consistently across policy areas. She argued that a CBAM for refining would help ensure fair competition by addressing the cost imbalance created by carbon pricing differences between the UK and overseas producers.
She added that UK fuel manufacturing remains strategically important, supplying nearly half of the country’s energy consumption and supporting around 100,000 jobs across the economy. According to the industry body, rising carbon costs that are not matched internationally are placing domestic producers at a competitive disadvantage.
The organisation warned that without policy intervention, the UK risks increasing its reliance on imported fuels, which could weaken energy resilience and increase global emissions if production shifts to higher-carbon jurisdictions.
A well-designed CBAM, it argued, would help preserve domestic refining capacity while supporting the transition to lower-carbon fuels and maintaining industrial competitiveness during the energy transition.
H2bulletin View: From a policy perspective, the debate reflects a broader tension in UK climate and industrial strategy between decarbonisation goals and maintaining domestic industrial capacity. As carbon pricing expands globally, governments are increasingly weighing border adjustment mechanisms as tools to prevent carbon leakage while protecting energy-intensive sectors during the transition.
