UK urged to commit to carbon tax

  • Market: Emissions
  • 01/12/20

A UK carbon tax is the "best-case scenario" for a carbon pricing regime in the country for next year, given the lack of time remaining in which to implement an EU-linked UK emissions trading system (ETS), environmental think-tank Ember said.

The UK leaves the EU ETS on 31 December at the end of the Brexit transition period. The government has yet to confirm whether it will establish a UK ETS — either linked back to the EU's system or operating as a standalone mechanism — or institute a carbon tax as a replacement.

But with just one month remaining, putting in place a UK ETS linked back to the EU's system is "impossible" by 1 January, Ember said. A carbon tax, therefore, is now the "least worst option".

A tax would be relatively simple to implement and provide price stability during the Brexit process, as well as establish a link between the carbon price of the two systems, Ember said. If enforced in 2021-22, a carbon tax would be based, according to government proposals, on the average price for the EU ETS December 2021 and December 2022 contracts.

A standalone UK ETS, on the other hand, is "risky and highly complex", Ember said, citing concerns that plans to set an allowance supply cap well above actual emissions could lead to permit oversupply and, consequently, inappropriately low carbon prices.

While a proposed price floor of just £15/t of CO2 equivalent (CO2e) — compared with an average closing price of roughly £24/t CO2e for the benchmark front-year EU ETS contract last month — would be an "international embarrassment for the UK's commitment to climate action", it said.

More can be done to shore up current carbon tax plans, such as setting up an independent panel to determine the tax rate and applicable sectors. Its scope could be extended to include areas such as fugitive methane emissions from the production and transport of fossil fuel, and the carbon price exemption for biomass removed.

A carbon border adjustment should also be introduced, Ember said, and concrete plans made to link carbon pricing with the UK's legally binding target to reach net-zero emissions by 2050.

The government should still consider setting up an EU-linked UK ETS in the future, the think-tank said, to provide the advantages of participating in a larger carbon market.

"It is long past time for the government to make a decision and allow businesses and investors to begin to plan for the new carbon pricing system," Ember said.

Business, energy and clean growth minister Kwasi Kwarteng indicated last month that the government is unlikely to clarify its position on plans for a carbon pricing regime in the country until after Brexit trade deal negotiations are concluded.

A number of groups have raised concerns over the feasibility of a standalone UK ETS. European power industry association Eurelectric said earlier this year that the system could face liquidity issues, while UK think-tank Policy Exchange warned of its vulnerability to volatility.

But carbon tax plans have also drawn criticism. The International Emissions Trading Association earlier this year said a carbon tax represents a "big gamble" for the achievement of the UK's climate neutrality target.


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23/05/24

US poised to back New Jersey offshore wind farms

US poised to back New Jersey offshore wind farms

Houston, 23 May (Argus) — US regulators could soon approve two offshore wind projects near New Jersey, but with stipulations that would slightly reduce the number of turbines installed in the Atlantic Ocean. The US Bureau of Ocean Energy Management (BOEM) favors a design for the Atlantic Shores South system that would result in up to 195 turbines, as many as 10 offshore substations and eight transmission cables to ferry electricity ashore to New Jersey, the agency said today in its final environmental impact statement for the project. Atlantic Shores South comprises two separate projects, Atlantic Shores 1 and Atlantic Shores 2, which are 50:50 partnerships between Shell and EDF Renewables. The pair's overall capacity is tentatively set at 2,837MW, with the first phase targeting 1,510MW and a size for the second to be determined. Atlantic Shores 1 has a contract to deliver up to 6.18mn offshore renewable energy certificates each year to New Jersey, with first power expected in 2027. The state selected the project through its second offshore wind solicitation, with the 20-year contract scheduled to begin in 2028. The developers had proposed installing up to 200 turbines, but BOEM decided to favor a modified plan, adopting alternatives put forward by the companies in the name of mitigating impacts on local habitats while limiting turbine height and their proximity to the shore to reduce the project's "visual impacts," a point of contention among New Jersey residents who fear damage to tourism in oceanside communities. The BOEM-endorsed design would have mostly "minor" to "moderate" effects on the surrounding environment, with exceptions including consequences for North Atlantic right whales, commercial and for-hire fisheries and local scenery, which could be "major." The areas potentially hit hardest by the projects would be open to "major" consequences regardless of the project design, according to BOEM's analysis. The preference is not BOEM's final ruling, but it does herald the path the agency is likely to take. Regulators will publish the review in a "coming" edition of the Federal Register, starting a mandatory 30-day waiting period before BOEM can publish its final decision on the project. By Patrick Zemanek Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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UK general election set for 4 July


22/05/24
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22/05/24

UK general election set for 4 July

London, 22 May (Argus) — A general election will take place in the UK on 4 July, prime minister Rishi Sunak said today. The announcement coincides with official data showing that UK inflation has fallen to its lowest level in nearly three years. Labour, the country's main opposition party led by Keir Starmer, has held a substantial lead in polls in recent months and performed well in local elections earlier this month. It won nearly 200 seats on local councils, as well as several regional mayoral contests, while the ruling Conservative Party lost almost 500 council seats. The Conservatives have been in power since 2010 and have fielded five prime ministers during that time. The two main parties are likely to release more detailed manifestos once the election campaign begins, but their current respective energy policies have many similarities. Both back a windfall tax on oil and gas producers and support nuclear power. They both also support offshore wind and solar power, although Labour has incrementally more ambitious targets for those renewables and has plans for more onshore wind. Labour also wants a zero-carbon power grid by 2030 , while the Conservatives are aiming for that in 2035. The Conservatives have rolled back some climate policy since Sunak became prime minister, while Labour in February backed down on its pledge to spend £28bn/yr ($35.6bn/yr) on the country's energy transition, if it wins the election. For a general election to take place in the UK, the prime minister must request permission from the British monarch — King Charles III — who then dissolves parliament. A general election must take place at least once every five years in the UK, although a prime minister can call one at any point. The UK's last general election was held on 12 December 2019 and Boris Johnson was elected prime minister. There have since then been two prime ministers — Liz Truss in September-October 2022 — and Sunak. Truss was selected by Conservative Party members and Sunak became prime minister in October 2022 after the only other candidate withdrew from the leadership contest. The Conservatives hold 344 seats out of 650 in the House of Commons, the UK's lower house of parliament. But 105 members of parliament have said that they will not run at the next election, 66 of whom are Conservatives. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Q&A: Over 100 entities trading Australia's ACCUs


22/05/24
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22/05/24

Q&A: Over 100 entities trading Australia's ACCUs

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G20 seeks to ease climate funding to cities


21/05/24
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21/05/24

G20 seeks to ease climate funding to cities

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UK will not bank ‘surplus’ from third carbon budget


21/05/24
News
21/05/24

UK will not bank ‘surplus’ from third carbon budget

London, 21 May (Argus) — The UK overachieved on emissions reduction targets under its third carbon budget, but it will not carry forward the emissions ‘surplus' to the next carbon budget, the government said today. A carbon budget is a cap on emissions over a certain period. The UK's third carbon budget covered 2018-22, while the fourth carbon budget covers 2023-27. UK emissions over 2018-22 stood at 2.15bn t/CO2 equivalent (CO2e) — 319mn t/CO2e below the third carbon budget cap. Emissions on average over the period were 47pc lower than emissions in 1990 — the baseline year. "By the end of the period in 2022, UK net greenhouse gas emissions were 50pc lower than base year emissions", the government said. The country is also on track to overachieve during the fourth carbon budget, it added. "The government decision not to carry forward the surplus keeps the UK within its ambitious target with no additional headroom to emit greenhouse gases over the coming years", the government said. The UK has made progress on cutting emissions, including phasing out coal. But the surplus was largely down to external factors, including the Covid-19 pandemic, the independent advisory Climate Change Committee (CCC) found previously. The UK has a legally-binding target to reach net zero emissions by 2050. It also has targets to cut emissions by 68pc by 2030 and 77pc by 2035, both from the 1990 base level. The CCC warned in February that the government should not carry forward any surplus from the third carbon budget, to avoid weakening action on decarbonisation. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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