Lords committee inquiry into carbon pricing and Brexit

The Lords EU Energy and Environment sub-committee is taking evidence on the future of UK carbon pricing, whether linked to the EU ETS or a new carbon emissions tax.

Carbon pricing is designed to reduce greenhouse gas emissions by increasing the cost of those emissions. One of the main carbon pricing mechanisms in the UK is the EU emissions trading scheme (EU ETS), from which the UK is likely to withdraw on leaving the EU. In its evidence session on 13 February, the committee explored the government’s carbon pricing options for ‘deal’ and ‘no deal’ scenarios.

In a ‘deal’ situation, the government hopes to create a domestic emissions trading system and link it to the EU ETS. Areas of questioning were to include:

• what policy decisions would need to be made;
• whether the model of the EU-Switzerland ETS link would be appropriate for the UK; and
• what impact the current ban on emissions trading in the UK is having.

In a ‘no deal’ situation, the government intends to implement the carbon emissions tax under legislation introduced in FA 2019 Pt 3. Likely areas of questioning included:

• whether the proposed tax level is appropriate;
• what the change would mean for industry;
• views of the devolved administrations; and
• implications for the UK’s carbon budgets.

See bit.ly/2E61e81.