Reconsidering Climate Mitigation Policy in the UK

December 4, 2020

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Format: Chicago

Nicolas Arregui, and Ian W.H. Parry Reconsidering Climate Mitigation Policy in the UK, (USA: International Monetary Fund, 2020) accessed December 22, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

The UK has pledged to cut greenhouse gases 57 percent below 1990 levels by 2030, to be emisisons neutral by 2050, and to phase out internal combustion engine vehicles by 2030. Much progress has been made, but fully achieving these ambitious objectives with the current policy framework will be challenging as it involves multiple and overlapping pricing schemes with significant sectoral differences in carbon prices and may be difficult to scale up on political and administrative grounds. This paper discusses an alternative framework consisting of: (i) a comprehensive carbon price (ideally a tax) rising to at least £60 (US $75) per ton by 2030; and (ii) reinforcing sectoral policies, most importantly feebates for the transport, industrial, and building sectors. This framework could implement mitigation targets, while limiting burdens on households and firms to enhance acceptability, and still raise revenues of 0.8 percent of GDP in 2030. The UK could also leverage its COP26 presidency to promote dialogue on international carbon price floors and pricing of international transport emissions.

Subject: Carbon tax, Climate change, Environment, Expenditure, Greenhouse gas emissions, National accounts, Public expenditure review, Taxes, Transportation

Keywords: Carbon pricing, Carbon tax, Climate change, Consumption emission, Efficiency cost, Emission rate, Emissions intensity, Emissions price, Emissions source, Equivalent emissions outcome, Feebate, Fugitive emission, Global, Greenhouse gas emissions, Industry emission, International carbon price floor, International carbon price floor., Net-zero, Price uncertainty, Public expenditure review, Transport sector emission, Transportation, UK climate mitigation, Waste emission, WP

Publication Details

Pages:

40
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/268
Stock No:

WPIEA2020268
ISBN:

9781513561264
ISSN:

1018-5941

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