BU carbon pricing research cited in select committee report on the financial sector and the UK鈥檚 net zero transition
BU research on the impact of carbon pricing聽has featured in a聽House of Commons (EAC) report on the role of the financial sector in helping the UK achieve聽net zero emissions by 2050.听
A cross-faculty team聽comprising and of the Business School, and of the Faculty of Science and Technology submitted written evidence which has been published as part of the report, titled聽.听
Their evidence聽included recommendations considering the economic welfare implications of carbon emissions pricing at a national and international level, and the need for carbon border adjustment mechanisms (CBAMs) that has informed the EAC鈥檚聽deliberations and subsequent recommendations to the Government.
Carbon pricing systems include carbon taxes and emissions trading systems (ETSs) in which carbon credits may be bought and sold thereby creating a 鈥榗arbon market鈥櫬爓hich, theoretically,聽could help achieve a global price for carbon.
In practice, however, carbon emissions pricing systems may encourage 鈥榗arbon leakage鈥� - where businesses in countries that have more stringent carbon pricing rules try to save costs by moving production activities to countries with less demanding carbon pricing rules and hence lower costs.听
CBAMs are designed to reduce carbon leakage by applying charges to take account of variations in carbon prices ruling in different jurisdictions.听
The BU research team discussed the risk that CBAMs might be seen as 鈥榗limate clubs鈥�, reducing the competitiveness of carbon-intensive emerging economies but concluded that CBAMs are necessary to minimise carbon leakage when carbon emissions pricing systems such as the UK鈥檚 Emissions Trading Scheme are implemented.听
In its report the EAC has recommended that the UK Government should develop a UK CBAM.听The BU research team is continuing to analyse the impact of carbon emissions pricing on wider public wellbeing in the UK. 聽聽聽聽
