Prime Minister Keir Starmer is planning to align the UK's emissions trading scheme with the European Union's system as early as next month, a move critics warn could increase energy bills for millions of British households.
The Labour leader intends to use a summit in May to link the UK and EU carbon credit schemes as part of his "reset" with Brussels. The alignment would potentially drive up the cost of producing electricity from gas-fired power plants.
Currently, this source accounts for 26 per cent of the UK's energy mix. Conservative MP Nick Timothy has warned the move could cost British households an additional £112 annually through more expensive goods and higher electricity prices.
The plan forms part of the Labour Government's strategy to "strengthen ties with Europe" following Brexit. Emissions trading schemes are used by both the UK and EU governments to fund net zero initiatives.
Britons could pay more as a result of the EU scheme
GETTY
These systems require carbon-emitting companies to purchase credits for each tonne of greenhouse gases they produce. Since Brexit, when the UK established its own emissions trading scheme, British carbon credits have been significantly cheaper than their European counterparts.
This price difference exists because the UK Government has set a higher cap on overall emissions. The current arrangement has allowed carbon-intensive British industries to operate at lower costs than their European competitors.
Linking the UK scheme to the EU's could result in a 50 per cent increase in the cost of carbon credits for British firms. However, the alignment would help British exporters avoid carbon import taxes imposed by the EU.
The UK-EU summit is scheduled for May 19 in London, where leaders are expected to announce the linking of their emissions trading systems.
Do you have a money story you’d like to share? Get in touch by emailing money@gbnews.uk.
Critics are calling into question the EU net zero scheme e
PASources told The Telegraph that even if the deal isn't finalised by the summit date, leaders will declare their intention to connect the schemes.
They would then instruct officials to continue negotiations towards full alignment. Cabinet Office minister Lord Hunt acknowledged last month that the Government was "actively considering the case" for linking to the EU scheme.
Nick Thomas-Symonds, the minister responsible for the EU reset, has previously expressed strong support for the plan. He told MPs that joining Brussels' system is "absolutely what the ambition is".
The move represents a significant step in Labour's strategy to rebuild closer ties with the European Union following Brexit.
The plan has drawn sharp criticism from Conservative MPs who believe the UK's 2050 net zero target is no longer realistic and could harm economic growth.
Timothy described the carbon credits alignment as "mindless Milibandism" and urged the Government to recognise that "actions have consequences" for voters.
LATEST DEVELOPMENTS:
Britons are looking for energy bill support Households warned faulty smart meters may leave 'large unexpected bills"Analysis shows that we could be heading towards an extra £112 on the cost of living because of European alignment," he said.
Timothy warned: "So long as policy races ahead of technology, this means higher energy bills, fewer jobs and weaker growth."
He expressed concern about the UK losing control over carbon pricing if it joins the EU scheme.
"If the Government signs up for the EU's cap and trade scheme, then we will lose control and allow carbon prices to hit eye-watering levels," Timothy said.
"This is going back on what was promised to voters during the election."
