EU proposals that target products with high carbon inputs would have a disproportionate impact on exports of the crisis-hit British steel industry, potentially impacting sites in Wales, the North East, Humberside and Yorkshire.

The claim was made in a Chatham House study analysed by the European Scrutiny Committee as part of its regular scrutiny of new and proposed EU legislation examining how it could affect the UK.

The levy, known as the Carbon Border Adjustment Mechanism, applies a charge on the import of certain products depending on how much carbon dioxide was emitted during production.

The charge will be equal to that levied on EU manufacturers of the same products through the block’s domestic Carbon Trading System.

UK goods already face a charge under the UK’s own emissions trading system and so would not be charged again, however a large amount of bureaucracy will be involved, proving how much carbon was emitted during production and providing evidence that a charge had been paid.

Although an agreement was reached between both parties on considering linking their emissions trading schemes as part of the UK/EU Trade and Cooperation Agreement signed in December 2020, little more has been heard since. MPs on the European Scrutiny Committee have demanded clarity from the UK Government on the progress of talks.