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1. Outline

This is a letter from Lord Deben, Chairman of the Committee on Climate Change, to Rt Hon Kwasi Kwarteng MP, Minister of State at the Department of Business, Energy and Industrial Strategy.

The letter is in response to a formal request from the UK Government, Scottish Government, Welsh Government and Northern Ireland Assembly regarding the future of carbon pricing in UK, specifically in relation to the successor to the EU Emissions Trading Systems (ETS) after EU exit.

2. Key Recommendations

The letter states that:

• Leaving the EU presents an opportunity for the UK to align the ambition of its trading scheme to the UK’s own circumstances. Ultimately, that requires a tightening of the cap of the scheme in line with a trajectory consistent with the UK’s Net Zero target for 2050.
• The Committee is pleased to see the Government’s intention to align the scheme to the CCC’s forthcoming advice on the Sixth Carbon Budget, and would like to see this enacted as soon as possible after that advice is provided.
• The Government’s interim proposals are inconsistent with the UK’s Net Zero ambitions in some respects, primarily relating to the relatively high level of allowed emissions under the proposed cap.
• There are a number of options that the Committee would consider to be a suitable way forward.