Following warnings that the new UK carbon trading system could lead to “government intervention”, Professor Philip Booth, Senior Academic Fellow at free market think tank the Institute of Economic Affairs, said: 

“The UK government has to decide whether it wishes to reduce carbon emissions or not. If it does, then this will be done at lowest cost to the economy if we use a system of carbon trading or carbon taxes.

“To introduce carbon trading and then begin exempting those interest groups that shout the loudest is a recipe for causing huge economic damage with much less benefit in terms of reduced emissions.

“If, however, the rise in the price is caused by illiquidity in the market then this calls into question the whole approach of using carbon trading, rather than carbon taxes, to reduce emissions.”

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