The Government is being urged by MPs to establish a “carbon border” to prevent the UK’s drive for net zero emissions being undermined by cheap foreign imports.

The Commons Environmental Audit Committee said while there was a carbon pricing system for goods produced in the UK, 43% of the country’s consumption emissions arise from imports which are not covered by the scheme.

It said introducing a “carbon border adjustment mechanism” (CBAM) – extending the carbon price levied on domestic production to equivalent imports – would be a “powerful lever” to reduce emissions and support the development of low carbon products.

The committee acknowledged that introducing such a measure at a time when living standards are under intense pressure, in large measure due to spiralling energy costs, would be “challenging”.

It said the Government would need to develop a strategy of public engagement to build consensus around the policy as a measure for tackling climate change, while ensuring vulnerable and low0income households were protected.

“Effective carbon pricing is crucial to decarbonisation, but cannot be achieved without effective anti-carbon leakage policies in place,” the report said.

“The Government’s current approach to addressing the risks of carbon leakage … is insufficient on its own to incentivise industrial decarbonisation effectively.”

While the committee acknowledged that a CBAM would need to be adopted internationally to be truly effective, it said reaching agreement would take time and that UK should start work unilaterally.

The committee chairman, Philip Dunne, said that despite difficulties, it was clear “the pros of a CBAM outweigh the cons”.

“A carbon border adjustment mechanism can drive change not only by addressing carbon leakage, but by driving low-carbon change across our economy,” he said.

“For too long the emissions from our consumption have effectively been ‘offshored’, leaving the problem as out of sight and out of mind.

“But we must all take greater responsibility for our consumption, and the practices that our businesses and organisations adopt.”