Article: Can a national carbon price be made fair and effective?

Conventional fiscal thinking needs to be turned on its head to implement a fairer, more effective approach to net zero, according to the authors of a new report.

Could the combination of the UK's strengthened climate targets and Brexit lead to a revival in the debate around carbon taxation? That is the question being asked by a growing band of academics and a new campaign group who are looking to explore whether replacing the current patchwork system of carbon pricing schemes with a broad-based carbon tax across all goods and services that emit carbon, would prove more effective at driving decarbonisation efforts, while providing a financial boost for low-income households.

A new report published yesterday by the Grantham Research Institute on Climate Change and the Environment, Vivid Economics, the ESRC Centre for Climate Change Economics and Policy, and the University of Leeds is aiming to spark a fresh debate on the merits of carbon pricing reform, while also informing the recently launched Zero Carbon Commission, a body set up last year with funding from OVO Energy chief executive Stephen Fitzpatrick.

The study highlights how the current carbon pricing framework in the UK is inconsistent across the economy and is not aligned with the country's new net zero emissions target, warning that while the energy sector and some industries face carbon charges, other sectors such as agriculture, residential heating, and air transport have had little incentive to abate emissions, even though they are large emitters.