Carbon tax and/or trading scheme – opportunity or threat?

Over the last few months there has been discussion about whether the UK would introduce a Carbon Emissions Tax or UK Emissions Trading Scheme (or both) to help drive down our emissions. Ultimately the government decided that an almost (excuse the pun) carbon copy of the EU Emissions Trading Scheme was the best, most straightforward immediate action. The idea of a Carbon Emissions Tax has, for the moment, been shelved. Although this may not necessarily be a good thing in the long term, except for a handful of business, this is certainly the least economically damaging outcome right now.

An emissions trading scheme provides the opportunity for industry to sell surplus performance or actions to mitigate emissions (offsets) subject to undertaking relevant and compliant actions. Under the current UK Emissions Trading Scheme this is very limited in scope and impact, but the mechanism could well be expanded. The industry will be able to benefit monetarily and provide additional business opportunities, subject to agriculture and horticulture being able to make such mitigations. This is of course assuming that the expansion of the scheme to allow these actions doesn’t also include penalties for other emissions sources that may exist in these businesses.

The Carbon Emissions Tax is likely to be much more encompassing where all products and materials are affected because of their inherent carbon emissions in production. Ultimately this drives up prices for all things, especially energy. Economically, this seems at first glance to be disadvantageous. However, it does serve to make carbon emissions reduction actions more economically favourable in the face of current limited incentive support for actions such as installing renewable energy.

The consideration of either of these systems needs to be included in any future energy strategy (including that for carbon emissions reductions) you plan to make, either as an opportunity or a threat.

Find out how we can help you with all your energy needs by giving the GrowSave team at NFU Energy a call on 024 7669 6512.

Jon Swain, NFU Energy