“Lots of scope for UK to improve low carbon incentives” – by George Day

Published: 4 March 2019

Energy Systems Catapult has welcomed Energy Minister Claire Perry’s plans for continuing carbon pricing policy after Brexit.

In a ‘deal’ scenario, Ms Perry told a House of Lords sub-committee on Wednesday that the UK intends to continue participating in the EU emissions trading scheme (ETS) until January 2021.

After this date, Ms Perry revealed the preferred option would be to set up a new UK scheme linked to the EU ETS.

Putting a price on carbon emissions is a key way to discourage the production of greenhouse gases. The current EU ETS charges carbon intensive industries, such as power stations and aviation firms, for the amount of CO2 they produce.

George Day, Head of Policy, Markets and Regulation at Energy Systems Catapult, said: “We welcome the government’s move to consult on options for a linked emissions trading scheme with the EU post-Brexit. We are also pleased that the Committee on Climate Change has been asked to advise on whether to tighten carbon reduction targets.

“Current incentives to cut emissions are too low and vary widely across different sectors of the economy. We need to increase the rewards for innovators who come up with new low carbon solutions.

“There is a lot of scope for the UK to improve the incentives for businesses and consumers to cut their carbon emissions, and to reward low carbon innovators and businesses. Designing a new UK emissions trading scheme could help with that.

“It’s also important that we don’t forget areas that are not currently covered by any emissions trading scheme – such as the carbon emissions from gas we burn to heat our homes. We need to think about how we create better economic incentives to cut carbon emissions in these areas too.

“Energy Systems Catapult’s Rethinking Decarbonisation Incentives project is looking at a range of policy options across the whole economy. In the coming weeks, we will be publishing reports on the near and longer-term options for policy reforms for the UK.”