Reconsidering Climate Mitigation Policy in the UK

Nicolas Arregui and Ian Parry

No 8920, CESifo Working Paper Series from CESifo

Abstract: The UK has pledged to cut greenhouse gases 68 percent below 1990 levels by 2030, to be emissions neutral by 2050, and to phase out internal combustion engine vehicles by 2030. Much progress has been made, but fully achieving these ambitious objectives with the current policy framework will be challenging as it involves multiple and overlapping pricing schemes with significant sectoral differences in carbon prices and may be difficult to scale up on political and administrative grounds. This paper discusses an alternative framework consisting of: (i) a comprehensive carbon price (ideally a tax) rising to at least £60 (US $75) per ton by 2030; and (ii) reinforcing sectoral policies, most importantly feebates for the transport, industrial, and building sectors. This framework could implement mitigation targets, while limiting burdens on households and firms to enhance acceptability, and still raise revenues of 0.8 percent of GDP in 2030. The UK could also leverage its COP26 presidency to promote dialogue on international carbon price floors and pricing of international transport emissions.

Keywords: climate change; net-zero; UK climate mitigation; carbon pricing; feebate; international carbon price floor (search for similar items in EconPapers)
JEL-codes: H23 Q48 Q54 Q58 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-ene, nep-env and nep-reg
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Working Paper: Reconsidering Climate Mitigation Policy in the UK (2020)
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