Chemical Industries Association reaction to the Environmental Audit Committee’s Seventh Carbon Budget Report

On 4 March 2026, the Environmental Audit Committee published its Eighth Report on the Seventh Carbon Budget, outlining the UK’s next phase of emissions reduction and placing fairness at the centre of the transition to net zero. The report acknowledges the scale of system change now required across homes, transport and industry, and highlights the importance of ensuring this transition strengthens UK industrial competitiveness rather than accelerating offshoring.

The Environmental Audit Committee’s report on the Seventh Carbon Budget, published last week, places fairness at the centre of the UK’s pathway to net zero. The Chemical Industries Association welcomes the Committee’s emphasis on a transition that works for people, households and businesses, and it is encouraging to see many of the issues we raised during the inquiry reflected in the final recommendations.

During the evidence gathering process, CIA highlighted the growing risk that emissions reductions in the UK are increasingly being delivered through declining production rather than investment in low carbon technologies. This trend, which leads to greater reliance on imports and a weakening of domestic capability, is recognised by the Committee in its warning against confusing genuine decarbonisation with deindustrialisation.

• We particularly welcome the Committee’s focus on preventing offshoring and strengthening UK industrial competitiveness. Key recommendations we support include:

• Clear plans to prevent emissions leakage and support domestic decarbonisation for energy intensive and trade exposed sectors

• Greater clarity on how electricity price support, infrastructure delivery and carbon pricing will operate together during the CB7 period

• A joined up approach to free allocation and the future UK CBAM to manage competitiveness risks during the transition

• Reducing electricity costs by removing appropriate policy costs from bills to support households, industry and the wider shift to low carbon technologies

The report also draws attention to the structural pressures facing energy intensive industries. UK chemical manufacturers continue to operate with some of the highest industrial electricity prices in the OECD, while carrying rising carbon cost exposure and facing delays to the low carbon infrastructure needed to support electrification, hydrogen and carbon capture. These challenges make long term investment significantly more difficult, particularly for sectors competing internationally.

Fairness within the Seventh Carbon Budget must therefore include a credible route for energy intensive and trade exposed sectors to invest and decarbonise in the UK. Chemicals underpin clean energy, advanced manufacturing, defence, pharmaceuticals and essential everyday products. A transition that weakens the UK’s industrial foundation risks slowing progress towards net zero, not accelerating it.

The CIA will continue working closely with Government, Parliament and industry partners to ensure the delivery plan for CB7 provides the clarity, competitiveness and long term certainty needed for companies to invest, innovate and maintain production in the UK. Our sector is ready to play its full part in supporting a fair, competitive and resilient transition