(Bloomberg) -- Britain should introduce an economy-wide carbon tax if it's forced to leave Europe's Emissions Trading System after Brexit, according to an influential Conservative research group.
A tax would be a better way to cut the cost of reducing greenhouse gases and help meet a 1.5-degree-Celsius (2.7 Fahrenheit) limit for global warming set out this week by the International Panel on Climate Change, according to the Policy Exchange. Chancellor Phillip Hammond's budget due at the end of the month would be a good opportunity to outline a new approach to carbon pricing, the research group said Wednesday.
“With Brexit looming, a decision needs to be made around whether the U.K. remains in the EU's carbon pricing scheme,” said Michael Howard, a former Conservative party leader, and Alistair Darling, a former Labour chancellor. “One option is an independent British carbon tax.”
The U.K. already has a carbon tax in the form of a minimum emissions price on top of which emitters must pay for EU allowances. While the level has been frozen until 2021, the budget speech has previously been when the Chancellor gives an update on future price support levels.
Policy Exchange recommends the U.K. should remain a member of the ETS until the end of the third trading period at the start of 2021.
To read more about Britain's possible exit from the ETS click here
To contact the reporter on this story: Rachel Morison in London at rmorison@bloomberg.net
To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net, Andrew Reierson
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