Reconsidering Climate Mitigation Policy in the UK
IMF Working Papers, December 4, 2020
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- Reconsidering Climate Mitigation Policy in the UK
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Bibliographic details
- Authors: Nicolas Arregui, Ian W.H. Parry
- Published: December 4, 2020
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513561264.001
Key objectives and context
- The UK has pledged to cut greenhouse gases 57 percent below 1990 levels by 2030.
- The UK aims to be emissions neutral by 2050.
- The UK plans to phase out internal combustion engine vehicles by 2030.
- Current policy framework 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.
Main proposal: alternative policy framework
- A comprehensive carbon price (ideally a tax) rising to at least £60 (US $75) per ton by 2030.
- Reinforcing sectoral policies, most importantly feebates for the transport, industrial, and building sectors.
Rationale and expected outcomes
- The combination of a comprehensive carbon price and targeted feebates could:
- Implement mitigation targets.
- Limit burdens on households and firms to enhance acceptability.
- Still raise revenues of 0.8 percent of GDP in 2030.
Additional policy opportunities
- The UK could leverage its COP26 presidency to promote dialogue on:
- International carbon price floors.
- Pricing of international transport emissions.
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- Working Paper