The Kingdom will either need to deal with higher carbon prices than its neighbors or face greater carbon leakage.
Carbon market analyst Huang Chang has analyzed the prospects for the UK and EU's race to decarbonize and the associated carbon price. She published her findings on her LinkedIn page.
“Expensive industrial decarbonization commitments will be a major factor in determining the next level of carbon pricing,” Huang Chang believes.
Lara Williams, a Bloomberg Opinion columnist on climate change coverage, states that the UK has made more progress in reducing emissions than any other G-7 country since 1990. But much of that reduction has come at the expense of the energy sector. This is due to the phasing out of coal.
In 2015, David Cameron's government set an ambitious goal of closing all non-operating coal power stations by 2025. Coal use in the UK peaked in 2012. Then, with its help, 40% of the country's electricity was produced. In 2023, fossil fuels as a whole accounted for only 33% of UK electricity, with coal accounting for just over 1%.
The pace of contraction in other sectors, particularly construction, transport and industry, has slowed in recent years.
Despite this, Huang Chang is confident that the UK's energy sector will decarbonise faster than the EU. And there are 2 options: either the country's carbon prices will rise faster than its neighbors, or the UK will face large carbon leakages.
“With the introduction of the UK CBAM scheduled for 2027, it is only a matter of time who will win this race,” the analyst concluded.
Earlier, EcoPolitic wrote, that at first Great Britain planned to introduce its CBAM from 2026, but subsequently this date shifted to 2027. In January, the UK government allocated more than 190 million pounds sterling (about $241 million) to decarbonize industry.
The other day, EcoPolitic reported that British traders are making record bets on a jump in the price of carbon credits in anticipation of a tightening of climate policy by the future Labor government.
Also in February, EcoPolitics reported that the UK's green economy grew by 9% in 2023.
