Holidaymakers may face increased airfares as a result of a new proposed 'green tax' on imported fuels, announced by Chancellor John Healey. The plan involves expanding a Net Zero 'carbon charge' on refined oil products, which could also lead to higher prices for drivers at the pump.
A consultation document released alongside the Budget suggests that the levy, known as the 'carbon border adjustment mechanism' (CBAM), could affect the prices paid by consumers for fuel products used across the economy.
Currently, British refineries incur Net Zero-related expenses that their overseas competitors do not, allowing imported fuel to be priced lower domestically. The proposed CBAM aims to level this playing field by subjecting imported fuel to similar Net Zero costs as domestically produced fuel.
Initially, the CBAM will apply to five sectors from January 1 of the following year: aluminum, cement, fertilizer, hydrogen, and iron and steel. However, the consultation also proposes extending this measure to include products such as petrol, diesel, and jet fuel. Given that the UK is a net importer of diesel and jet fuel, this could lead to significant price increases for consumers.
Tim Alderslade, chief executive of Airlines UK, expressed concern over the proposal, stating that it adds to existing passenger taxes, which are already among the highest globally. He warned that extending costs to imported jet fuel, on which the UK relies heavily, would push up fares at an inopportune moment. Alderslade added that this could erode the UK's competitiveness as an aviation hub and urged the government to reconsider the plan.
