The climate change committee has called on the Government to place a higher tax on household gas to help the UK meet its net zero targets as part of a wider "review of the role of tax policy in delivering net zero".
The Government is effectively subsidising the cost of fossil fuel heating despite signing up to a key clause in the Glasgow Pact at COP26 that requires countries to phase out "inefficient fossil fuels subsidies".
The Government's position is that the UK does not have fossil fuel subsidies because it does not have a policy to artificially lower prices to below market rates.
However, reduced VAT and the lack of a carbon price on gas and other fossil fuels are effectively ‘post-tax' subsidies as they don't reflect the cost of climate change, the climate change committee said.
"If the tax system is to support the transition as it should, a higher and more consistent carbon price across the economy will be needed, which would also remove post-tax subsidies", it added.
Detailing the Glasgow Pact's success in phasing out global coal usage, encouraging zero-emission vehicles, and making more public and private finances available, the Government said:
"The UK will continue to work with other countries to deliver on the Glasgow Climate Pact and drive further action, working closely with Egypt which will take over the COP Presidency in November 2022."
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