A new policy briefing paper by the London School of Economics and Political Science (LSE) has suggested that the burden of the post-COVID 19 economic recovery should be weighted towards the nation’s key polluters.
The paper, which has been produced by the Grantham Research Institute, suggests that the global pandemic presents opportunity as well as risk. They implore policymakers to “prepare proactively, as the UK did in World War II when it published (in 1942) The Beveridge Report, laying the foundations for the post-war welfare state”.
The report’s premise is that the cost of carbon globally is not currently high enough to be consistent with the goals of the Paris Agreement, whilst the level of subsidy to fossil fuels is far too high.
Because oil prices are so low, policymakers must act now to ensure that the economic recovery is not founded on a high carbon footing that will be more costly to reverse further down the line.
Moreover, following the swathe of public spending globally in the wake of the pandemic, it is suggested that debt levels are re-balanced by increasing carbon prices rather than through raising direct taxes.
Should the recommendations find their way into the public sphere, it is likely that UK electricity and gas prices would rise considerably, with cost savings increasingly driven by reducing consumption.
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