UK Government undecided on how to price…

UK Government undecided on how to price carbon after leaving the EU ETS
2020-10-13 13:41:00
Until the end of December 2020, the carbon emissions from key sectors of the UK economy come under the European Emissions Trading System (ETS).  From January 2021, a new system has to be put in place. The options are either for the UK to have its own ETS, or alternatively to tax carbon. The Treasury is keen on the economy-wide carbon tax. The BEIS is keen on a new ETS. There might also be a hybrid scheme. A decision is expected by early December, but this lack of charity is very late for business etc that need to plan now for what they will be doing in 2021. Some companies would end up paying less with an ETS than with a carbon tax, if the price of carbon allowances is too low.  The current EU ETS carbon price is about £24 per tonne, but the UK ETS price could be around £15.  Within the EU ETS, only flights within the EU are included – not flights outside Europe, so the scope is very limited. It is important that aviation pays tax on its carbon, and it is also important that the system is in place from January 2021, not a year or two later. The Aviation Environment Federation says: “In the event that the UK does not develop its own emissions trading system, there is a risk that UK aviation will not be subject to any carbon pricing from 1 January 2020. This would be a backward step, and send the wrong message…”   .Tweet   UK Government Split Over Carbon Market After Brexit By Jess Shankleman, Tim Ross, and Will Mathis (Bloomberg Green) 12 October 2020,  Updated on 13 October 2020  – Treasury wants carbon tax to replace Emissions Trading System  – Business department is creating a U.K. cap and trade market U.K. Chancellor Rishi Sunak’s Treasury is locked in a battle with Alok Sharma’s Business Department over how to ensure polluters pay for their emissions after Brexit. The Treasury is pushing to replace the European Union’s cap-and-trade system with an economy-wide carbon tax, which would come into effect after Britain exits the bloc in January. The Department for Business, Energy and Industrial Strategy is drawing up a new emissions-trading system to start in January similar to the EU program that the U.K. currently participates in. One person familiar with the debate predicted that an ETS was a li

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