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“Modest” carbon tax would have little effect on consumer prices, say academics

“Modest” carbon tax would have little effect on consumer prices, say academics


 

The application of a “modest uniform tax” on emissions across the economy would have only a negligible impact on consumer prices, research by the Grantham Research Institute on Climate Change and the Environment has found. The paper––released on Monday 11 January––said implementing a carbon tax of £20/tCO2e across all fuels would increase consumer prices in the UK by a maximum of 0.9%.  It found that a small number of industries, including oil refinement, coal, iron and cement, were likely to see an increase in production costs. The paper concluded that policies would be needed to assist sectors with high emissions adapt to the “changing economic conditions from a uniform carbon tax.”

 

LSE