Coherent carbon policies key to achieving net-zero target

Developing strong and coherent policies on carbon emissions will be key to achieving the 2050 net-zero target, the Energy Systems Catapult has stated.

The organisation has previously highlighted a large disparity in effective carbon prices in the UK, which vary between industries by up to £700 per tonne, as well as a series of options for harmonising rates across the entire economy.

In its latest report on the subject, the Energy Systems Catapult (ESC) says the current situation is “far removed from the textbook ideal of economy-wide carbon pricing and constrains low-carbon innovation”.

But it also warns that international experience suggests it is enormously difficult to implement such a policy: “No major economy has yet succeeded in applying explicit carbon pricing policies at a sufficiently stringent level to deliver economy-wide progress in line with Paris agreement objectives.”

With this in mind, the ESC has produced five main recommendations to allow policy-makers to tackle the issue more easily:

• Take opportunities to improve the current framework of policies by adjusting existing mechanisms to align emissions reduction incentives across the economy.
• Consolidate and streamline existing measurement, monitoring, and verification of all emissions and related incentives.
• Take immediate steps to progress a carbon policy driver for residential heat, including detailed design of an enduring framework of carbon standards.
• Develop a pathway towards economy-wide policy framework covering all emitting activities, with a linked market for greenhouse gas removals.
• Integrate carbon reduction into the measurement of economic productivity.

ESC head of markets, policy and regulation, George Day, said: “Reaching net zero will require strong and coherent economic incentives to reduce emissions and spur innovation across all sectors of the economy, particularly in how we heat our buildings.

“International experience suggests that an economy-wide carbon tax or emissions trading scheme is extremely challenging to implement. But approaches based on tightening standards have a strong record of delivering cost-effective carbon reductions in many sectors and jurisdictions.”

He continued: “New carbon standards on harder-to-tackle parts of the economy, like heating, could be set to tighten over time, creating an enduring market pull for the innovation needed to achieve net zero.”

“We believe an economy-wide carbon policy framework – comprising a mix of market, pricing, and regulatory interventions – can bring forward investment and innovation to deliver clean growth.”