30 Jun 2011 11:06:01
IPPR criticises carbon floor price policy
Government plans for a carbon floor price have been criticised in a new report from the Institute for Public Policy Research (IPPR).
According to the research, the implementation of such a policy in the UK would essentially create two prices for CO2
– one in Britain and one in the rest of Europe.
It claims this would prevent the central aim of the policy, to slash CO2
emissions, as British firms would simply sell the surplus emissions credits on to others in Europe, giving them licence to produce more CO2
The policy would also lead to £1 billion of economic waste, the IPPR said.
"Because a floor price for carbon in the UK will depress the carbon price elsewhere in Europe, the UK will effectively hand over billions to European polluters," the institute's Andrew Pendleton said.
Instead of the current system, the IPPR recommended the implementation of a Europe-wide carbon floor price.
The Confederation of British Industry has previously warned that the carbon floor price could damage the competitiveness of sectors of the UK economy which are the heaviest energy users.