Government Announces Tighter Grip on Industry Emissions From 2024

A plane approaches landing over the rooftops of nearby houses at Heathrow Airport in London, Tuesday, Oct. 25, 2016. AP Photo/Frank Augstein

A new limit on emissions for the power sector and aviation industries will come into force next year it has been announced.

On Monday, the government said that under net zero rules, a limit for industries will be required “from selected high energy industries” from 2024.

The announcement forms part of a package of reforms by the UK Emissions Trading System Authority (UK ETS).

The UK ETS is a scheme that incentivises decarbonisation “through a process of buying and selling emissions allowances, which companies must obtain for every tonne of emissions they produce each year.”

Companies that are successful in reducing their emissions “can sell unused allowances to other firms.”

They must do this for every tonne of emissions they produce each year and put a limit on the total amount of greenhouse gases aviation, power and other energy-intensive industries can emit.

The domestic maritime transport, waste incineration and energy from the waste sector have now been added to the scheme.

From next year, these industries will be required to bring their emissions down at the rate needed to reach net zero goals.

The UK has legally bound commitments to reducing greenhouse gas emissions by at least 100 percent of 1990 levels (net zero) by 2050.

In a joint statement, UK ETS authority ministers, including Lord Callanan, Julie James, Mairi McAllan and Gareth Davies, said:  “Our UK ETS, along with other interventions, forms part of a wider strategy to provide a long-term framework to incentivise UK industries to decarbonise—seizing the huge opportunities that are arising from a rapidly expanding clean energy sector, and providing the certainty that industries need to invest in new green technologies.”

Tax

“There is no issue in principle with using ‘cap and trade’ to create a carbon price that reflects the social cost of emissions,” Andy Mayer, chief operating officer and energy analyst at the Institute of Economic Affairs, told The Epoch Times by email.

“It’s an efficient, market-based way of nudging investment towards better solutions,” he said.

Mr. Mayer said that it can create a “single emissions price between different markets which reduces distortions such as the very low tax on flying versus a very high one on driving.”

“But it’s still a tax, the cost of which is passed on to customers, and can render impacted businesses internationally uncompetitive. Imposing a net zero by 2050 timeline on the UK ETS could mean future prices that encourage market exit, not investment,” he said.

“It’s more sensible to limit changes in allowances to international benchmarks, linking our carbon price to major rivals. This limits the impact on competitiveness, and ensures changes keep pace with global rates of innovation rather than political idealism,” added Mr. Mayer.

Roads

Last week, climate advisers Climate Change Committee (CCC) told the UK government that it should consider stopping road-building schemes for net zero.

The report said that the government should consider a plan similar to Wales where all major road-building plans have been cancelled.

In February, Wales’s Labour-led government said that all planned road-building schemes in the country have been cancelled and won’t be built unless they comply with strict conditions that won’t cause more emissions or cars.

At the time, Deputy Minister for Climate Change Lee Waters said all infrastructure projects in the future must now “reduce carbon emissions and support a shift to public transport, walking, and cycling.”

The Welsh government will only consider future road investment for projects that pass strict net zero criteria, which means they must not increase carbon emissions, increase the number of cars on the road, or lead to higher speeds.

“This provides an example of how a sector-specific net zero test can be applied in practice,” the CCC said.