Holidaymakers face higher air fares as new Budget ‘green tax’ on imported fuels announced by Chancellor John Healey could apply to jet fuel
Chancellor John Healey has proposed extending the UK’s carbon border charge to imported refined fuels, including jet fuel. The measure is intended to bring imported fuel closer to the net zero costs faced by British refineries, but could raise costs for airlines and holidaymakers.
The charge, known as the Carbon Border Adjustment Mechanism (CBAM), is due to begin on aluminium, cement, fertiliser, hydrogen, and iron and steel from 1 January next year. A Budget consultation proposes adding petrol, diesel and jet fuel; the UK imports more diesel and jet fuel than it exports, and the consultation says higher costs could reach households and other end-users. Airlines UK says the proposal could push up fares and affect the country’s aviation competitiveness.
In short
- The Government may extend its carbon border charge to imported jet fuel.
- Airlines warn higher fuel costs could raise fares.
- The UK imports more jet fuel than it exports.
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The case for
Extending the carbon border charge to imported jet fuel could help ensure overseas producers face costs similar to those borne by UK refineries under domestic climate policy. Supporters may argue this reduces incentives to shift production abroad and makes the transition to lower-carbon fuels fairer, while encouraging emissions cuts across the fuel supply chain.
The case against
Including jet fuel could raise airlines’ operating costs and pass some of those costs on to passengers, making holidays and travel less affordable. Critics may also argue that higher costs could weaken UK aviation’s competitiveness, particularly if airlines can refuel elsewhere or face different rules in other countries.
Explained simply
The UK plans to charge importers for some of the carbon emissions linked to making goods abroad, through a scheme called the Carbon Border Adjustment Mechanism. It is due to cover several materials from next January, and the Government is consulting on adding imported petrol, diesel and jet fuel.
The proposal is intended to bring imported fuels into line with costs faced by UK refineries under climate rules. The UK imports more diesel and jet fuel than it exports, so any extra costs could affect businesses and households that use them.
Airlines buy jet fuel to operate flights, and industry group Airlines UK says the proposed charge could increase fares and affect the sector’s ability to compete. The outcome will depend on whether the Government adopts the proposal and how the charge is applied.
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