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Environment Protection: Taxation

Question for Treasury

UIN 22429, tabled on 28 February 2020

To ask the Chancellor of the Exchequer, if he will make it his policy to maintain the carbon price in the next 12 months; and what assessment he has made of the effect of carbon pricing on the decarbonisation of the UK economy.

Answered on

9 March 2020

The Government is committed to carbon pricing as a decarbonisation tool following the transition period. In line with the Withdrawal Agreement, the UK will remain in the EU Emissions Trading System until 31 December 2020.

Alongside the EU ETS, the UK also applies the Carbon Price Support rate. Together, these have helped to reduce the importance of coal in the UK’s energy generation mix: electricity generation from coal usage has fallen from 40% in 2012 to 5% in 2018. Further detail on carbon pricing will be set out at the Budget.

Additionally, in November 2019, HM Treasury published Terms of Reference for its review into how the transition to a net zero economy will be funded, and where the costs will fall. The review will ensure contributions are fair between households, businesses and the taxpayer, and will allow us to maximise economic growth opportunities from the transition. The review will publish its findings in Autumn 2020.

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