UK government mulls carbon tax push

The UK government is reportedly considering an overhaul of carbon taxes in a bid to spark global climate action ahead of COP26 Climate Summit in Glasgow

Reports suggest UK government is considering a radical overhaul of the country’s carbon taxes in a bid to spark global climate action ahead of COP26 Summit.

The government has instructed every department in government to propose a price for carbon emissions, in a move that could provide the basis for a major extension of the UK's carbon tax regime.

The Times reported that it has seen a Whitehall memo that confirms Number 10 and the Treasury have asked all departments to bring forward plans for a carbon pricing scheme that would cover all areas of the economy, potentially leading to new levies on carbon intensive products and services, such as meat and dairy, and gas for heating, which are currently subject to negligible or non-existent environmental taxes.

The Chancellor and the Prime Minister want a sector-by-sector view on how we could implement some form of carbon pricing and an overall roadmap to deliver [it] in the next decade, the memo reportedly states. Options under consideration include a "direct carbon tax", it added. Proposals are expected to be submitted by departments before the end of April.

The paper also reported that plans for new carbon taxes that adhere to the "polluter pays" principle could form a central plank of the government's diplomatic strategy ahead of the crucial COP26 Climate Summit in Glasgow this autumn.

The big driver for this is if you can get a decent chunk of countries to agree to some kind of carbon price floor then you can finally have an [international] system that encompasses all the big competitive industries and potentially agriculture, one source close to the government told The Times.

Carbon pricing is set to be a key issue at the COP26 Summit, as governments explore how to accelerate decarbonisation efforts without creating a patchwork of carbon pricing regimes that encourages polluting businesses to relocate to jurisdictions with the no carbon taxes in place.