The UK will introduce a provisional £16-a-tonne carbon emissions tax in the event of a no-deal Brexit as part of contingency plans to replace the EU Emissions Trading Scheme. The level set by the Treasury is broadly in line with the current EU ETS price, which suggests it would be high enough to continue disincentivising the use of coal by power plants and factories and maintaining the UK’s commitment to reducing pollution. The announcement, while contingent on no-deal Brexit, removes one of the big uncertainties for UK power markets at a time of great upheaval in the system. Under the plan the UK would essentially have two separate yet fixed carbon prices, including the current carbon price support system — commonly known as the carbon floor — which has been frozen at £18 a tonne until 2021. Financial Times

 

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