In a response received this week, the Exchequer Secretary confirmed that the Government will not progress with CBAM expansion for 2028 – despite the refining sector meeting the criteria set out by Treasury and repeated ministerial recognition of the importance of maintaining domestic refining capacity.
The decision leaves the UK’s four remaining refineries facing rising carbon costs, while imported fuels – often produced to higher carbon intensities – continue to enter the market without equivalent charges.
The development builds on concerns raised in previous Fuel Oil News coverage, which highlighted widening policy gaps and increasing pressure on the UK refining sector. Industry warnings have consistently pointed to the risk that, without intervention, the UK could become increasingly reliant on imports to meet demand.
An industry exposed
Responding to the Treasury’s position, Fuels Industry UK (FIUK) said the decision represents a critical missed opportunity to level the playing field and safeguard domestic production.
Elizabeth de Jong, CEO of Fuels Industry UK, said: “Delaying CBAM and potentially not delivering it at all is not a neutral act. It increases the likelihood that Britain becomes 100% dependent on imported fuel over time. That is not a responsible position for a major economy – especially at a time of global instability and geopolitical risk.”
FIUK argues that the absence of a CBAM exposes UK refiners to a structural competitive disadvantage, as they continue to absorb carbon costs that are not applied to overseas competitors.
For distributors and end users, the implications extend beyond industrial competitiveness. Greater reliance on imports increases exposure to global supply disruptions, freight volatility and geopolitical tensions – risks that have been brought sharply into focus in recent years.
The sector has previously warned that reduced domestic refining capacity could limit supply resilience, particularly during periods of market stress or logistical disruption, when import dependency can quickly translate into availability and price pressures at the rack.
Elizabeth added: “This decision is not a technical or timing problem – it is a political choice. By refusing to deliver a 2028 CBAM, the Treasury is knowingly increasing the competitive disadvantage faced by British refineries.”
With no clear timeline for future inclusion of refined products within CBAM, industry leaders are now calling for urgent, tangible policy action to prevent further erosion of the UK’s refining base.
For fuel distributors who are on the frontline of fuel supply, it points to a market increasingly shaped by imports, with all the associated implications for supply security, pricing dynamics and long-term resilience.
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