Question to the Department for Business, Energy and Industrial Strategy:

To ask the Secretary of State for Business, Energy and Industrial Strategy, with reference to the Government's response to the consultation on the future of UK carbon pricing published on 1 June 2020, what assessment he has made of the potential (a) merits and (b) costs of a carbon free and dividend policy; and for what reasons his policy is not to implement that policy at this time.

A carbon fee and dividend is an alternative form of carbon pricing policy. The UK already prices carbon through, for example, our participation in the EU Emissions Trading System (EU ETS).

The UK Government and Devolved Administrations are establishing a UK Emissions Trading System, with increased ambition on carbon pricing. The new system will ensure a smooth transition for businesses as the UK is set to leave EU system after the Transition Period at the end of the year, while also allowing us to have autonomy over its design and governance.

The UK Government has, on 21 July, also published a consultation on the design of a domestic carbon emission tax as an alternative to a UK ETS. This option will ensure a carbon price remains in place in the UK in all scenarios.