The United Kingdom has long been a world leader in environmental policy. We are a progressive country, eager to make a difference in the world and eager to leave the globe in a better state than when we found it.
However, for years we haven’t been able to make a true mark upon the world. The European Union’s Emissions Trading Scheme has undoubtedly made a difference with six straight years of declining emissions. However, with emissions rising last year, it may now be time to assess whether an ETS is the best way to address greenhouse gas emissions. The UK is now in the best position to make this assessment.
In a paper delivered yesterday, the Policy Exchange has made the argument that an “economy-wide carbon tax paid by both domestic and international producers would prevent carbon leakage, level the playing field for Britain’s heavy industry, fund a dividend to be paid to taxpayers and tackle climate change.”
This would mean that that the UK would widen its carbon tax, from one based solely on penalising power generators and heavy industry to a new set-up that includes the firms that sell fossil fuels. The tax would initially continue at the level at which the UK leaves the EU ETS in 2021, and steadily rise at a rate set by an independent body such as the Climate Change Committee to give the policy institutional certainty and bankability.
Revenues from the tax could then be divvied up and paid into Briton’s bank accounts as an annual or quarterly lump sum, thereby ensuring policy transparency and boosting public support for climate action. The government could then investigate ways of paying the dividend so the most vulnerable in society reap the greatest rewards, while residents should also be able to borrow against their dividend payments to invest in, for example, energy efficiency measures. Such a policy means that when fossil fuel companies are impacted by a price hike, the rest of the economy will not suffer the consequences.
This is an innovative debate we must now have. Taking back control of our own policies and no longer being tied to a stagnate ETS means that the public and the parliament can debate the best way to protect our environment. We are a progressive country, eager to make a difference in the world and eager to leave the globe in a better state than when we found it and a full and proper Brexit is our chance to do this.