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Rethinking Decarbonisation Incentives: Near-Term Options to Address Low-Priced Emissions

Energy Systems Catapult’s ‘Rethinking Decarbonisation Incentives’ (RDI) is taking a fresh look at how carbon policy could be improved to promote clean growth. In this report, we explore the near-term options to improve the existing framework of policies, with priority placed on under-incentivised emitters in the UK.

Reaching net-zero emissions by 2050 requires sufficient economic drivers and rewards for investment in decarbonisation, as well the reduction of various technological, behavioural, institutional, and market barriers.

Figure 1: Effective carbon prices and emissions in the UK by sector

Figure 1: Effective carbon prices and emissions in the UK by sector

Click here to download a larger version of Figure 1.

Carbon policy’ (including taxes, subsidies, and regulations that create economic incentives to reduce greenhouse gas emissions) has built up over time, taking account of circumstances in different sectors. This has the advantage of being able to tailor the policy approach to the needs of the sectors, but has the disadvantage of making it harder to create coherent price signals between sectors.

An obvious short-term approach to carbon policy reform would be to take the opportunity to increase and align effective carbon prices through adjusting existing measures.

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Rethinking Decarbonisation Incentives: Near-Term Options to Address Low-Priced Emissions

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