Kemi Badenoch pledges to fully axe carbon tax if Tories regain power

The Conservatives have pledged to fully axe the carbon tax if they get back into power.

The party had already proposed removing the tax as it applies to electricity generation, but now say they would go further and fully scrap the carbon tax regime, the cost of which they say is burdening British industry.

But Labour said such a move would be “wrong” and “hammer” industry.

The Conservatives said they would get rid of the UK emissions trading scheme (ETS), which was brought in under the Tories in 2021 and sets a carbon limit on certain sectors, meaning they must minimise emissions or fund measures to offset them.

It currently applies to the heavy industry, power and aviation sectors and is set to extend to the maritime industry from July.

Sir Keir Starmer has committed to linking the UK emissions trading scheme with the EU’s as part of his Government’s reset with the bloc.

The Tories have said they would also scrap the carbon price support, a levy paid by fossil fuel electricity producers, as well as the carbon border adjustment mechanism (CBAM) due to come into force in January next year.

The CBAM is a carbon levy on imported goods that aims to stop UK firms being undercut by overseas manufacturers and also goes back to Tory government policy from 2023.

Such a mechanism could give industry a boost but that requires a UK carbon price, according to the Energy and Climate Intelligence Unit (ECIU) think tank.

Jess Ralston, head of energy at the ECIU, said: “A well-designed, carbon border adjustment mechanism could help rejuvenate British industry, helping make it more competitive with other cheaper countries, and many businesses have been calling for one for years.

“But it’s predicated on a UK carbon price and, if we don’t have that, revenues that would have been going to Treasury will instead by transferred into EU coffers when British industry exports to the EU, our largest trading partner.

“A significant amount of UK steel is exported to the EU each year. Market-based policies like carbon pricing and CBAM have long been advocated for by think tanks and politicians on the right of politics, so there’s a big question around what you do instead to reach net-zero emissions, given that is essential to stopping climate change.”

Tory leader Kemi Badenoch has rowed back on her party’s climate policies and support for net zero since taking the reins.

She said it was “madness” to pursue the goal of leaving a better environment for the next generation by “killing British industry and fatally weakening our national resilience”.

Mrs Badenoch said: “As a former business and trade secretary, I have heard from countless bosses how carbon taxes and green levies have made doing business in Britain much, much harder than it needs to be.

“It’s time to reverse decades of deindustrialisation, by doing what Keir Starmer lacks the backbone to do: axe the Carbon Tax in its entirety.”

UK ExxonMobil chair Paul Greenwood said the current system was “unfair” as the UK refining industry pays hundreds of millions in CO2 costs every year that many international competitors do not.

He said: “We need a system that accounts for the carbon emitted as these products are created, not just in the UK but wherever in the world that happens. A ledger-based carbon emissions accounting framework can help ensure that carbon footprints are understood no matter the origin of the product.”

Industry minister Chris McDonald, however, accused the Tories of “hypocrisy” given that Mrs Badenoch herself introduced emissions trading scheme legislation to the Commons as a Tory minister.

He said: “Kemi Badenoch has exposed her own hypocrisy given she personally introduced these measures as a Tory Treasury minister.

“It’s a total embarrassment for her to, yet again, be railing against her own work in government. Her new pledge is wrong, and it would hammer industry.”

He Said: “This multi-billion-pound, unfunded, spending commitment has echoes of Liz Truss and would leave working people picking up the bill. The failed Conservative Party haven’t changed, and their sums still don’t add up.”