Starmer must scrap EU net zero deal, Labour MPs warn

Telegraph

4 days ago

Sir Keir Starmer is facing fresh pressure to scrap his Net Zero deal with Brussels amid warnings that it will harm British businesses.
A cross-party group of MPs, including two Labour backbenchers, have written to the Government to argue that linking Britain's energy system with the EU's as part of a 'reset' could put UK companies out of business.
Sir Keir announced in May that he would link the UK's Emissions Trading Scheme (ETS), through which companies buy carbon credits, with its equivalent in Europe.
Carbon credits are designed to discourage carbon emissions and offset the environmental damage caused by polluters.
Oil and gas producers and high-emissions manufacturing businesses are required to buy credits from a marketplace regulated by the Government, which each allow them to emit one tonne of carbon.
However, since Brexit the UK's system has been run separately to the EU's, and the prices have varied for the first time.
Credits in the UK are currently trading at a significant discount compared to their European counterparts.
The MPs warned that by aligning Britain with Brussels, Sir Keir will push up the cost of production in the UK and could push businesses to relocate abroad.
He will also hand control over the management of the scheme to the EU, forcing British companies to be regulated by a system that the UK government does not manage.
The Government argues that linking the schemes will lower trade barriers between the UK and EU, as part of a wider 'reset' with Brussels after Brexit.
But in a letter to Nick Thomas-Symonds, the EU relations minister, the MPs said that the UK must enforce a series of 'red lines' ahead of further negotiations with the European Commission.
They warned that the UK should not 'become a rule-taker with no say in the scheme' and warned Sir Keir not to accept 'dynamic alignment' – which would lock the UK into changes the EU decides in the future.
Henry Tufnell, the chair of the Commission for Carbon Competitiveness, said the two carbon schemes should not be linked until the cost of credits is comparable, to avoid a spike in costs for businesses.
'We support closer cooperation with the EU – and UK industry must be protected,' he said.
'The current path risks higher prices, a drop in our competitiveness, closures and job losses.'
'There is still time to get this right, but the UK must retain a say in the scheme in the long-term.
'Giving control over to the EU means we can't act in the best interest of our manufacturing industries or change approach if our circumstances change'.
Their letter comes after The Telegraph revealed that linking the ETS schemes could drive up energy bills by increasing the cost of electricity from gas-fired power stations.
Under the plans, carbon-intensive electricity generators will be required to buy carbon credits at the higher EU price. They are likely to pass the additional costs on to consumers.
Nick Timothy, the Conservative MP, estimated that the Brexit 'reset' could add £112 to household bills, through higher energy prices and the increased cost of carbon-intensive goods.