- Over the last six months, carbon prices from the UK’s Emissions Trading Scheme raised over £1 billion less than if prices had remained at the previous year’s levels.
- Energy UK reported that imposing a carbon border tax on some imported goods to Europe starting in 2026 could affect British industries.
An industry report said yesterday that Britain’s Treasury could lose 3 billion pounds ($3.6 billion) of revenue a year from the sale of carbon permits after prices on its post-Brexit emissions trading system fell this year faster than in the EU. Britain’s ETS, launched in 2021, works like the EU system it replaced, requiring manufacturers, power companies and airlines to pay for each metric ton of carbon dioxide they emit to help meet climate targets.
Britain’s ETS had mostly tracked the cost of carbon in the EU or traded above it until April this year, when Britain announced changes, tightening a cap on the scheme. But this is signalling that it would release more permits from a reserve. Since then, the UK carbon price has fallen by more than 40%, while the EU has fallen by only around 18 per cent.
A report by industry group Energy UK has stated that “Over the last six months, carbon prices from the UK’s Emissions Trading Scheme (ETS) have raised over 1 billion pounds less than if prices had remained at last year’s levels. If low carbon prices persist, the Treasury could lose 3 billion pounds in revenue annually.”
Energy UK reported that imposing a carbon border tax on some imported goods to Europe starting in 2026 could affect British industries. It was covered by the tax if the price difference persists. Europe’s carbon border tax will impose fees on imports of emissions-heavy goods including steel, aluminium and cement – unless the exporting country has equal CO2 pricing policies. Energy UK said the government should work to link its ETS with the EU’s to avoid such penalties. A representative for Britain’s Department for Energy and Security and Net Zero emphasized the ETS’s role in achieving climate targets would be auction 2027.