Article: At what price? Zero Carbon Commission backs economy-wide £75 a tonne carbon tax

Carbon tax could generate £27bn by 2030 that could be invested into Covid-19 recovery efforts, emerging green technologies, and cushioning against any rise in household bills, campaign group argues

As the UK prepares to leave the EU Emissions Trading Scheme (ETS) at the end of the Brexit transition period, it remains to be seen how the government will price carbon to incentivise different sectors to slash their carbon emissions in line with its 2050 net zero target.

While the Department for Business, Energy, and Industrial Strategy (BEIS) set out a plan earlier this summer for a UK ETS that broadly mirrors the EU's cap-and-trade system, the Treasury is simultaneously consulting on the potential for a carbon tax.

While advocates of emissions trading systems - which set a cap on emissions within a sector and gradually reduce it over time - argue that the approach allows for a ratcheted reduction in emissions in line with decarbonisation targets, critics counter the mechanism is administratively complex, unfairly benefits politically influential sectors, and results in volatility in prices and weak emissions caps.

The Carbon Commission this week firmly placed itself in the latter camp, arguing in a major new report that economy-wide carbon pricing should be introduced from 2021 that rises incrementally across different sectors before universally settling on £75 per tonne of carbon dioxide by 2030.