Suffering businesses are facing higher costs as Keir Starmer seeks to link Britain to the EU’s green scheme.
The Prime Minister, who is in Brussels today as part of his ‘reset’ five years after Brexit, wants to align the UK’s emissions policy with that of the European Union.
But analysts and Leave campaigners say the move will drive up prices for British energy and manufacturing firms because the price of carbon is far higher on the continent.
There are fears it could even trigger higher electricity bills for households as well as businesses that have to buy permits to offset their emissions.
It will also raise fresh claims that Labour is seeking to reverse Brexit, as it may mean the return of EU law on the statute book.
However, major industries including steel and power generation are said to support Labour’s plan as a way of avoiding a looming EU carbon tariff.
It comes as Sir Keir prepares to attend an ‘informal meeting’ with the 27 leaders of the bloc in the Belgian capital today, having hosted German chancellor Olaf Scholz for talks at the PM’s country retreat Chequers yesterday.
He will ‘set out his pitch’ for an ‘ambitious’ new defence and security agreement, Downing Street said last night, as part of his vow of ‘making Brexit work better for the British people’.
Prime Minister Keir Starmer shakes hands with European Commission president Ursula von der Leyen in Brussels
Major industries including steel and power generation are said to support Labour’s plan
He will ‘set out his pitch’ for an ‘ambitious’ new defence and security agreement, Downing Street said last night, as part of his vow of ‘making Brexit work better for the British people’.
But in return he will face demands for the UK to give way on fishing rights and a youth mobility scheme, as well as signing up to ‘full dynamic alignment’ with European law on the carbon schemes.
Conservative peer and former Brexit negotiator Lord Frost told the Mail: ‘It makes no sense to lock us into EU net zero policy by adopting their emissions trading scheme.
‘Not only do we lose control of our own rules, joining the EU’s will be even more expensive and push our costs even higher.
‘We should be doing everything possible to wind down the net zero madness and going our own way.’
Tory business spokesman Andrew Griffith added: ‘If Labour drag the UK back into more EU emission regulations, they will add more costs to businesses and for consumers.’
Former business secretary Jacob Rees-Mogg said: ‘Emissions trading schemes are a means of making energy more expensive.
‘They should be abolished if we want growth. Rejoining the EU scheme would raise costs and lose business.’
Until recently, the price of a tonne of carbon on the British market has been as little as £35, far lower than the £70 in the EU
Tory business spokesman Andrew Griffith warned the move would add more costs to businesses and consumers
After Brexit, the UK set up its own emissions trading scheme – a system which forces firms to buy permits if they pollute more than an annual cap set on greenhouse gas emissions.
Until recently the price of a tonne of carbon on the British market has been as little as £35, far lower than the £70 in the EU.
But in the past week, the UK price has passed £45 after it was reported that Sir Keir wanted to align the two markets.
It means British firms are already having to spend more to buy the permits – and would be landed with even higher costs if the schemes were aligned.
This could be passed on in higher electricity bills to consumers, because power-generating firms have to pay for their emissions.
Utility policy analyst Steve Loftus said the price of moving to the EU scheme could be as high as £3.7 billion a year.
Separate research by the Tories suggests that the bill for big businesses could be as high as £2 billion in a year to buy carbon at the higher price.
Independent energy consultant Kathryn Porter, of Watt Logic, said: ‘Linking the UK and EU emissions trading schemes will make carbon emissions more expensive.
Former business secretary Jacob Rees-Mogg said emissions trading schemes ‘should be abolished’
‘Making any goods created through the use of fossil fuels will become more expensive, which will be very inflationary.
‘It will increase the UK’s already very expensive industrial electricity prices – it’s no wonder industry is leaving and jobs are being lost.’
But industry representatives insist that big businesses support Labour’s plan to link the two markets, saying the UK’s independent system has been too volatile.
And they want Britain to be exempt from the introduction by Brussels next year of a new tariff on imports of dirty energy, known as Carbon Border Adjustment Mechanisms (CBAM).
Industry figures believe this new tax will dwarf the extra costs firms will have to shoulder from a higher carbon price.
A government spokesman said: ‘Under the terms of the Trade and Cooperation Agreement, the UK Government and EU agreed to consider linking our respective carbon pricing schemes and to cooperate on carbon pricing.’
