O N E U K A L L O W A N C E the future of uK Carbon Pricing

Sandbag argues that a standalone UK ETS would be dysfunctional due to its small size and vulnerability to volatility and speculation. The organization recommends that the UK either remain part of the EU ETS or implement a carbon tax with a floor based on the average EU ETS price. Key proposals include expanding carbon pricing to fossil gas and fugitive methane, ending the zero-emissions treatment of large-scale biomass burning, and distributing carbon revenues to citizens as a 'climate dividend'.

• A standalone UK ETS is considered high-risk and likely dysfunctional because its small market size—approximately 128 million allowances in 2018—would leave it vulnerable to speculation, gaming, and extreme price volatility.
• The closure of the UK coal fleet would remove the possibility of coal-to-gas switching in the power sector, making power-sector emissions unresponsive to carbon price changes in the short term and increasing reliance on industry for emissions flexibility.
• Sandbag proposes a carbon tax as a preferable alternative to a standalone ETS, suggesting it be set within a range recommended by the Climate Change Committee (CCC) and reviewed every five years to align with carbon budgets.
• To ensure investment continuity, any carbon pricing mechanism should include a price floor set at least at the average EU ETS carbon price of the preceding year, which was approximately €25 at the time of the report.
• The report argues that large-scale biomass burning should no longer be treated as zero emissions, suggesting instead that the Climate Change Committee assess and tax its carbon intensity.
• Carbon revenues should be partially distributed to citizens as a 'climate dividend' to ensure political irreversibility, encourage public engagement, and offset transition costs for consumers.
• The UK should expand the scope of carbon pricing to include fugitive methane emissions, particularly at fossil fuel extraction points, and investigate including interconnectors within the Carbon Price Support to discourage high-carbon electricity imports from Germany and the Netherlands.

APA

Ember (n.d.). O N E U K A L L O W A N C E the future of uK Carbon Pricing. https://ember-energy.org/app/uploads/2024/12/2019-UK-Carbon-Pricing-plus-consultation_UPD.pdf

Chicago

Ember. O N E U K A L L O W A N C E the future of uK Carbon Pricing. n.d. https://ember-energy.org/app/uploads/2024/12/2019-UK-Carbon-Pricing-plus-consultation_UPD.pdf.

Wikipedia

{{cite report |author=Ember |title=O N E U K A L L O W A N C E the future of uK Carbon Pricing |url=https://ember-energy.org/app/uploads/2024/12/2019-UK-Carbon-Pricing-plus-consultation_UPD.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{emberndfuture, author = {{Ember}}, title = {{O N E U K A L L O W A N C E the future of uK Carbon Pricing}}, institution = {Ember}, url = {https://ember-energy.org/app/uploads/2024/12/2019-UK-Carbon-Pricing-plus-consultation_UPD.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }