The government could generate £27bn by 2030 through lifting the carbon price to £75/tCO2e, according to research.
On 21 September, The Zero Carbon Campaign published a report, setting out recommendations for how a stronger carbon pricing can both facilitate the UK’s transition to net zero, as well as a green recovery from COVID-19. It called on government to announce a clear carbon price trajectory reaching a minimum of £75/tCO2e by 2030 charged upstream on producers of greenhouse gases. It noted that both national and international studies have deemed this a necessary price to reach net zero by 2050.
While for the majority of sectors, carbon prices can begin being incrementally increased from 2021, the report called for government to announce its trajectory immediately for domestic heating for implementation within this parliament. This would allow homes time to reduce their reliance on gas and other heating fossil fuels such as oil, including the uptake of energy efficiency measures, before the charge is introduced and act as another incentive for them to do so. In contrast, for industry and agriculture, the introduction of a changed carbon pricing regime should wait until border arrangements are in place.
The revenue such a price would be expected to generate – £27bn in 2030 – could then be used alongside other government expenditure to help fund the COVID-19 recovery; support innovation and investment in clean energy alternatives, such as emissions capture technologies, electrification and hydrogen; and cushion rises in household bills.