PARLIAMENTARY DEBATE
UK Emissions Trading Scheme - 10 February 2026 (Commons/Commons Chamber)

The carbon pricing emissions trading scheme is set by the market, rather than the Government. The price is effective at driving investment in carbon abatement measures, but it is for individual operators to decide whether the costs of abatement in a project are effective for them.

Last week the Government updated their carbon values to reflect their latest net zero emission target, but the UK emissions trading scheme does not take into account the updated figures. In 2021, it was predicted that carbon abatement for a third runway at Heathrow would cost £100 million, and costs will have only risen since. According to the emissions trading scheme, just 15% of the clean-up costs of expansion will be covered by Heathrow; the rest will fall on the taxpayer. Will the Minister update the UK emissions trading scheme to reflect the carbon abatement costs of major projects such as Heathrow expansion, so that the taxpayer can understand how much they will have to pay for a third runway?

The Government do not comment on or interfere with the carbon price. Ultimately, the price is set by the market to ensure that the ETS drives decarbonisation where it is cheapest. In this way, it can act most effectively as a financial incentive to decarbonise, without specifying the particular technology.

I call the shadow Secretary of State.

Thank you, Mr Speaker, and it is great to see you back on your feet.

Last week, the Labour party voted to increase the carbon tax, which increases costs for households and industry, and those costs have already doubled because of its policies. It is absolutely shameful for the Government to say that they have had no impact on the carbon tax whatsoever. It now accounts for over 10% of household electricity bills, and the rise is in effect a £5 billion a year tax on the British economy. Can the Minister explain why the Labour party wants to tax our industrial jobs out of existence, leaving Britain reliant on dirtier imports from abroad?

I am not sure if the shadow Secretary of State is conflating the various carbon taxes with the emissions trading scheme, but to be clear: the Government do not set or comment on the value of the carbon in the emissions trading scheme. That is a matter for the market. It is of course a policy on which the previous Government were very keen, because it drives the most efficient forms of decarbonisation. Ultimately, it places a price on carbon emissions that ensures private capital floods into the right places to decarbonise, as we have seen so successfully with the power sector in the UK.