The Chancellor should use the imminent Autumn Budget to strengthen carbon pricing and extend subsidies for renewable energy.
That’s the suggestion from the Grantham Research Institute on Climate Change, which warns the freeze on the carbon price support rate at £18 per tonne is inconsistent with achieving the goals of the Paris Agreement.
The group recommends the government should introduce a uniform carbon price across the economy, as recommended last month by Professor Dieter Helm in his review of energy costs, claiming this is the most cost-effective way to reduce emissions.
The report says emissions from the UK’s power sector must fall by up to 70% to meet the Fifth Carbon Budget and states this will require “a major substitution of low-carbon sources for natural gas”.
It advises renewable technologies still need support to overcome the obstacles they face in competing with fossil fuels and suggests the auction of contracts for clean electricity are vital to make power affordable for business and household consumers.
The group concludes that the price of fossil fuels must reflect the costs they impose on climate change and air pollution and urges the Chancellor to implement stronger policies to improve energy efficiency measures.