Introduce charges on carbon emissions to tackle climate crisis and air pollution

Air pollution kills 64,000 people in the UK every year, yet the Government provides annual fossil fuel subsidies of £10.5 billion, according to the European Commission. To meet UK climate targets, the Government must end this practice and introduce charges on producers of greenhouse gas emissions.

A ‘carbon charge’ would encourage industries and organisations to reduce their carbon emissions, and could raise billions for the UK economy. The Government can ensure the charge does not unfairly impact those who cannot afford to pay by using some of the money raised to support low income households through the low-carbon transition. The UK should also utilise its position as host of COP26 and the G7 summit to drive global progress on carbon pricing.

The Government remains committed to maintaining an ambitious carbon price to ensure that polluters continue to pay for their emissions.

The UK has now launched its own Emissions Trading System (ETS) to replace membership of the EU ETS. This will be the world’s first net zero cap and trade market, delivering a robust carbon price signal and promoting cost-effective decarbonisation by allowing businesses to cut carbon where it is cheapest to do so.

The UK ETS covers emissions from power generation, energy intensive industries and aviation. Alongside this, the Carbon Price Support rate on fossil fuels used in electricity generation will ensure that a strong decarbonisation signal is maintained to ensure a downwards trajectory in power sector emissions as we push to fully drive out coal.

The 2020 Energy White Paper committed to exploring expanding the UK ETS to the two thirds of emissions not currently covered by the UK ETS, and set out our aspirations to continue to lead the world on carbon pricing in the run up to COP26 and beyond.

The UK Government is also determined to tackle air pollution given its significant negative impact on public health, the economy and the environment. Air quality has improved significantly over recent decades thanks to the action we have already taken.

The Government continues to take action to reduce emissions and improve air quality through the vehicle tax system. Users of zero and ultra-low emission vehicles have beneficial Vehicle Excise Duty (VED) and company car tax (CCT) rates in comparison to conventionally fuelled vehicles. To improve air quality, new diesel models that do not meet the Real Driving Emissions 2 (RDE2) standard for nitrogen oxide emissions have also gone up by one VED band on first registration and the CCT supplement for diesel cars that do not meet the latest RDE2 standard has increased from 3 to 4%.