CCC advises PM to raise carbon prices in post-lockdown response

The government’s climate change watchdog has urged Boris Johnson to exploit the recent plunge in the price of oil by introducing a long-term hike in carbon taxes.

The recommendation is outlined in a letter from the Committee on Climate Change (CCC) advising the prime minister on how efforts to tackle climate change can form part of the government’s post-coronavirus recovery package.

It says the government, which has been forced to run up a massive deficit to cope with the economic shock resulting from the Covid-19 pandemic, could garner new revenues by raising carbon prices for heavily emitting sectors of the economy.

“Low global oil prices provide an opportunity to offset changes in relative prices without hurting consumers.”

And it says the design of the UK’s new carbon pricing mechanism to replace the EU emissions trading system (ETS) should ensure an “appropriate” price for carbon is maintained even in times of external shocks, such as the current oil price drop.

The letter also calls for “urgently needed” reskilling and retraining programmes to equip the workforce to design, build and install low-carbon heating systems and energy efficiency upgrades.

As an example, it says that if oil prices continue to be suppressed, the North Sea’s highly-skilled oil and gas workforce must be retrained and redeployed in future low-carbon industries, including carbon capture and storage (CCS).

And the CCC says existing plans for a “large scale” national low-carbon infrastructure programme, including new electric vehicle charging and carbon storage, should be accelerated.

As part of this, it calls for the UK’s energy system networks to be “significantly strengthened” to accommodate the electrification of heat and transport, as well as growing offshore wind energy generation capacity.

The letter says the social distancing measures, which have been introduced during the current pandemic, will “inevitably” have a short-term impact on the ability to physically deliver efforts to cut emissions, such as new renewable generation devices.

But the CCC says its proposed green stimulus measures will provide a “major stimulus” to economic recovery by basing it on “green and growing” sectors, while delivering spin off benefits such as improved air quality.

Baroness Brown of Cambridge, chair of the CCC’s adaptation committee, said: “This pandemic has shown that global risks need global solutions. As president of next year’s pivotal COP26 climate summit, the UK now finds itself in a unique position to ramp-up climate action at home and supercharge the international response to climate change abroad. The risks we face as a globalised society are now in sharp focus – for their part, UK leaders must act decisively on a climate resilient recovery, and do so together.”

Responding to the CCC letter, Energy UK’s interim chief executive, Audrey Gallacher said: “The energy sector has led the way in reducing the country’s carbon emissions to levels that – even before the pandemic – were last seen in the 1890s. It will be ready to play an integral part as we further expand low carbon sources of power, develop further alternatives to fossil fuels like hydrogen, make our homes and businesses energy efficient and decarbonise heating and transport.”

Richard Black, director of the Energy and Climate Information Unit, said: “Things have changed markedly since the last global economic downturn a decade ago – renewables are now cheaper than the alternatives, both they and energy efficiency have been shown to be major job-creators, and many companies from airlines to oil are acknowledging that a simple return to the pre-Covid situation isn’t tenable.”

“The principles that the committee is outlining are therefore likely to resonate with a British public that opinion surveys show still wants to get carbon emissions tackled, even in the middle of the Covid crisis: prioritise measures that simultaneously deliver jobs, economic recovery and climate benefits, make pollution bear its true cost, and don’t throw public money at sectors and businesses that are dwindling anyway.”