Carbon pricing on aviation must not be watered down post-Brexit, says AEF

9th October, 2020

Treasury and HMRC recently consulted on the introduction of a possible Carbon Emissions Tax in the event that the UK does not introduce its own emissions trading scheme (the Government’s favoured option). The tax would initially apply to stationary installations, but the consultation asks, in the years after 2021, how the tax could drive decarbonisation in other sectors like aviation.

AEF’s response highlights the importance of carbon pricing as part of a package of measures needed to achieve emissions reductions in the aviation sector, and the lack of existing policy mechanisms to send effective price signals. As well as assessing how a Carbon Emissions Tax could apply to aviation, the Government should seek to remove all barriers to the imposition of fuel taxation on domestic and intra-EU flights, and explore other tax options to ensure the sector pays a fair contribution towards public finances (including helping to fund the green recovery) and meets climate targets.

For our full response, click here.