Carbon pricing in the UK post-Brexit: tax or trade?

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Authors: Geraldine Satre Buisson and Luciana Miu
Published: April 2017

This discussion paper considers whether it is time for the UK to leave the EU ETS.

Policy Recommendations

To achieve success, the UK's policies should build on its carbon pricing history to offer the necessary long-term certainty in a pragmatic and streamlined manner. While the relative merits of ETSs and carbon taxes are still subject to debate, hybrid pricing schemes have become a default around the world, including the UK, to a level of success dependent on the economic and political climate of the jurisdiction. A carefully built hybrid that provides clear price signals, might be the best policy option for the UK in the longer term. However, to provide certainty, the UK might also consider the option of staying in the EU ETS whilst being outside ECJ rule.

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