Companies selling fossil fuels in Britain should face a steadily rising carbon tax to tackle climate change after Brexit, according to the former Labour chancellor Alistair Darling and the Conservative party grandee Michael Howard.
In a cross-party campaign to ensure the government sticks to its commitment to cut carbon emissions after Britain leaves the EU, the two politicians said a tax should be introduced as soon as reasonably possible.
Launching a report by the Policy Exchange thinktank calling for the introduction of an economy-wide carbon tax, Darling and Howard said unilateral action was necessary to tackle climate change.
“The UK has a duty both to assist developing nations to adapt to the negative effects of climate change and to cut our own emissions faster than those without the means to do so,” they said in a joint statement.
The Policy Exchange report says Britain should remain a member of the EU’s flagship emissions trading system (ETS), designed to increase the cost of using carbon across the bloc, until at least 2021. The government could then introduce a carbon tax set at the level of the ETS, which could then be steadily increased in future years.
The ETS is designed to combat climate change by reducing emissions from more than 11,000 installations in the power sector and energy-intensive industries across the EU. The policy involves a market-based cap and trade system that forces companies to buy allowances to emit carbon.
There has been uncertainty about Britain’s status in the scheme after Brexit, although it is thought the government wants to remain at least closely aligned to the system.
Should Britain exit the ETS, an independent body could dictate the level of the tax and the proceeds could be used to fund a dividend to taxpayers, the Policy Exchange says. The tax would apply to imports and domestic production to ensure the same levy is paid in Britain by international competitors to UK industries such as steel.
Darling and Howard said: “With Brexit looming, a decision needs to be made around whether the UK remains in the EU’s carbon pricing scheme, known as the emissions trading system (ETS). One option is an independent British carbon tax.
“As climate change is a global problem and emissions do not respect national boundaries, innovative policy solutions like those proposed by Policy Exchange need to be part of any conversation.”
This week climate scientists said there were only 12 years left to keep global warming from rising above a maximum 1.5C, beyond which even half a degree would significantly worsen the risks of drought, floods, extreme heat and poverty for hundreds of millions of people.
