The House of Lords EU Energy and Environment sub-committee today
continued its inquiry into post-Brexit carbon pricing.
Witness(es)
(at 11:00 am)
Rt Hon MP, Minister of State for
Energy and Clean Growth, BEIS
Mr Dan Osgood, Director, Heat & Emissions Trading, BEIS
Ms Anne-Therese Farmer, Deputy Director, Energy and Transport
Tax, HM Treasury
Mr MP, Exchequer Secretary, HM
Treasury
asked what would be
required to create a domestic emissions trading scheme. said there were five steps
required: consultation, IT infrastructure - on which a
consultation would be published on the week commencing March 11,
with a commitment to go live on January 1 2021; negotiations with
future EU partners; another Statutory Instrument to establish the
scheme, to be laid in 2020; and legislation in the devolved
assemblies.
asked about linking a
domestic ETS with the EU's. Perry said the Switzerland example
was a helpful precedent. But the UK was a much larger market -
10% versus Switzerland's 1%. Given that and the UK's progress and
ambition, she felt strongly we would continue to be influential
and not fall into the role of rule-takers, as had Switzerland.
Her sense was it would be possible to move quickly towards a
linked ETS scheme. There had been no formal discussions, but
preparations had been made.
asked about EU/ETS
phases in the event of the UK leaving with a deal. Dan Osgood
said the current withdrawal agreement stated that the UK
would stay in the ETS until the end of the current phase on 31
December 2020. The aim was the successor arrangements would take
over immediately, but we would be ready for all eventualities.
felt the 11 years it took
Switzerland to negotiate with the EU did not bode well for the
UK. replied that, given our
current position of alignment, the strong statements about the
desire to form an effective scheme and the value of the UK's
emissions pool, she would be disappointed if it took anything
like that length of time.
The focussed his questions
on devolution. Perry said there had been excellent engagements
with the devolved governments. There was a joint ETS working
group. The issue was one of governance going forward.
asked about pricing
and the differences between the UK carbon tax and the ETS price.
said powers were only being
taken on a contingency basis. Prices would be set at fiscal
events (currently only the autumn budget). That would result in a
deviation from a traded system. Anne-Therese Farmer pointed out
it was normal to have divergence in pricing.
On the subject of a divergence, asked if the Commission's
view had been sought in the event of a significant differential.
said these powers were only
being taken in the event of a no-deal Brexit, so there had been
no discussion with the EU. A price had been set with continuity
in mind.
asked about the objections
of the Scottish and Welsh administrations to the carbon emissions
tax. replied this was a tax issue
and therefore not devolved, but there had been a consensus that
action had to be taken in the event of a no deal.
asked about the use of
taxes for climate and energy-related purposes. replied that the UK spent
significantly more than the currently required 50% and there was
no intention of changing that. A decision had not yet been made
with respect to the revenues for the carbon emissions tax feeding
through to the devolved administrations. At the moment the
revenues were Barnetted.
Replying to Lord Young of Norwood Green's questions on
restrictions on greenhouses gas emissions, said the government would seek
to ensure our future approach would be at least as ambitious as
the current situation.
returned to the issue of a
carbon tax in the event of a no deal. said much was explained in
the technical note published alongside the last budget. Under the
proposals, emissions would continue to be reported as they were
today. If the tax was required there, would be an immediate
consultation on the finer details of the policy.
