Moves due to be outlined later today (29 October) to replace the EU Emissions Trading System (EU ETS) with a carbon tax would be “devastating” for energy-intensive industries across the UK, ministers have been warned.
A “no deal” Brexit policy paper, published by the Department for Business, Energy and Industrial Strategy (BEIS) a fortnight ago, stated that the UK will cease to participate within the trading system if the government is unable to negotiate a withdrawal from the EU by the end of next March.
The technical notice, outlining how the UK will meet its climate change requirements if there is no Brexit deal, said the government would initially meet its existing carbon pricing commitments via the tax system.
More details of how a carbon price will be applied have been promised in the Budget, which takes place this afternoon.
Alex Cunningham, Labour MP for Stockton North, warned about the potential consequences of introducing a carbon tax during the House of Commons question time for the Department for Exiting the European Union (DEXU) last Thursday.
He said: “The carbon tax as outlined would be devastating for companies such as CF Fertilisers in Stockton and energy-intensive industries across the country.”
He asked that the level of relief against the proposed carbon tax should leave energy-intensive industries no more exposed financially than they already are under the EU emissions trading scheme.
Chris Heaton-Harris, parliamentary under-secretary of state at DEXU, said that details on the proposed ETS replacement arrangements will be included in the Budget and follow up Finance Bill for 2018-19.