Carbon Emissions: Taxation

(asked on 18th November 2020) - View Source

Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential merits of using carbon taxes to incentivise (a) carbon capture and storage, (b) hydrogen and (c) other Net Zero-focussed innovation fuel technologies to decarbonise (i) industry and (ii) transport.


Answered by
Kemi Badenoch Portrait
Kemi Badenoch
President of the Board of Trade
This question was answered on 26th November 2020

The UK is committed to carbon pricing as a tool to drive decarbonisation to support our transition to a Net Zero economy by 2050.

The Government will implement an ambitious and effective carbon pricing regime to replace our membership of the EU Emissions Trading System following the Transition Period and is legislating to establish potential negotiated and alternative options to support this.

A linked UK Emissions Trading System (UK ETS) remains the Government’s preferred option, provided that any link negotiated suits both sides’ interests. As outlined in a Government Consultation Document published in July 2020, a Carbon Emissions Tax is being explored as an alternative option.

As part of its consultation on the Carbon Emissions Tax this summer, the government set out proposals to incentivise decarbonisation of industry and other sectors through taxation. A summary of responses will be issued shortly.

More broadly, the government agrees that technologies such as hydrogen and Carbon Capture and Storage are important in helping the UK reach its climate targets. With this in mind, the government recently committed to £12bn of investment in the Green Industrial Revolution as part of the recently published 10 Point Plan. The aim of this investment is to create and support up to 250,000 highly-skilled green jobs in the UK, spurring over three times as much private sector investment by 2030 and ultimately accelerating the UK’s path to Net Zero.

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