Carbon prices in the UK need to reach £75/tonne by 2030 and renewable subsidies should be shifted away from being levied onto electricity bills to help achieve net zero, according to a new report.
The white paper from the Zero Carbon Campaign, made up of scientists, business leaders, environmental and academic experts, argues that carbon prices should begin to be increased incrementally from 2021 and should apply to all upstream producers of emissions if the nation is to meet its 2050 net-zero target.
A higher carbon price across both power and heating could bring in annual revenues of £27 billion by 2030 and could be used to fund support mechanisms such as the Renewables Obligation and Contracts for Difference schemes, which the report argues should no longer be levied directly onto electricity bills. New support schemes for the expansion of renewables could be funded by general taxation or carbon charge revenues.
The campaign also argues carbon pricing instruments including the Carbon Price Support (CPS), the UK Emissions Trading System (UK ETS), Climate Change Levy charges (CCL) and Climate Change Agreements (CCA) should be streamlined, with a single, simple mechanism.
The report stressed that “a carbon charge is neither the only policy required to get to net-zero nor the only source of funding”.
“More will be required to fund R&D and industry transition than a carbon charge is likely to raise. But carbon charges could form a very substantial part of the money needed, whilst driving the behaviour necessary to transition.”
The Zero Carbon Commission was formed in February 2020 to review the UK emissions pricing landscape and explore how it might be re-designed to be consistent with the UK’s legislated ‘net zero’ target.