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Offering allowances to high emitters creates the wrong incentives and makes it harder for the UK to benefit from net zero’s economic opportunity (“UK government cuts cost of polluting in latest anti-green move”, Report, July 31).
David Sheppard and Rachel Millard’s article illustrates how the UK is letting politics get in the way of progress regarding climate action. Indeed, this will have adverse effects on the climate and the economy. However, in failing to consider the voluntary carbon markets, the article — and the government — miss a massive opportunity to accelerate the net zero transition. It will take an estimated capital investment of $3.5tn annually over the next 30 years, from public and private sectors, into the technology and infrastructure required to deliver a zero-carbon economy. Carbon pricing is a leading approach to stimulate this financing, but a legislated price on carbon covers only a quarter of global emissions. The UK should provide clear backing and guidance for voluntary carbon markets’ growth to drive investment and innovation and strengthen existing carbon prices.
Only six months ago, the government released its updated Green Finance Strategy, affirming its intention to “position the UK as a global trading hub for voluntary carbon markets” — where companies primarily trade carbon credits and are not yet regulated. Today’s news is a missed opportunity to bring us closer to that goal. Instead of catering to lobbying, the UK should find and exploit opportunities in the transition and incentivise corporate action, like China has done with solar energy and electric vehicles or Singapore with the carbon markets.
After decreasing emissions allowances, the UK should allow companies to use high-quality carbon credits in place of a portion of Emissions Trading System obligations.
Now is the time for the UK to lead by fostering trust in carbon markets and creating urgency for corporate action. It has proven it can, most recently promoting innovation and growth in industries such as financial services. Repeating that success in the carbon markets would be game-changing and turbocharge the net zero transition.
Allister Furey
Co-founder and Chief Executive, Sylvera
London EC1, UK
