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Energy & tax · UK-wide

The Conservatives' plan to axe the Carbon Tax

Kemi Badenoch's pledge to scrap the UK Emissions Trading Scheme in full — what the "Carbon Tax" is, who it affects, and the arguments on both sides.

Status: Proposal — not law Region: UK-wide Party: Conservative (Kemi Badenoch) From: Party announcements, 2026

What's being proposed

The Conservatives have pledged to fully scrap the "Carbon Tax" — the UK Emissions Trading Scheme (UK ETS) — if they return to power. Having previously proposed removing it only for electricity generation, the party now says it would abolish the regime entirely. Leader Kemi Badenoch has framed it as reversing "decades of deindustrialisation".

Where it comes from

The UK ETS was introduced in 2021, under a Conservative government, and puts an effective price on carbon for heavy industry, power and aviation (extending to maritime from July 2026). Firms must cut emissions or buy allowances. Badenoch has rowed back on net zero, calling it "madness" to pursue it by "killing British industry", and says carbon taxes and green levies have made doing business in Britain harder.

How it would work

  • The UK ETS would be abolished, so covered firms would no longer pay for carbon allowances.
  • Supporters say this cuts costs for energy-intensive industries — such as steel and refining — that face charges many overseas competitors do not.
  • It contrasts with the current government, which plans to link the UK scheme with the EU's as part of its EU reset.
There's no direct household rebate here. The effect on ordinary bills is indirect and disputed: supporters argue removing carbon costs on power and industry eases prices; critics argue the savings are uncertain and the lost revenue could end up flowing abroad.

The case for and against

The party argues

  • It removes a cost that UK industry pays but many international competitors don't, helping steel, refining and manufacturing.
  • It could support jobs and competitiveness and take some pressure off energy costs.
  • It reverses what the party calls damaging deindustrialisation.

Critics argue

  • Labour says scrapping it would "hammer" industry and is an unfunded, multi-billion-pound commitment.
  • Without a UK carbon price, exporters could face the EU's carbon border charge (CBAM) — so revenue that would have gone to the Treasury could instead go to "EU coffers" (per the ECIU).
  • It weakens UK climate commitments — and Badenoch introduced some of these measures herself as a minister, which opponents call inconsistent.

Sources & further reading

This is an opposition proposal, not government policy. Claims about the effect on bills and industry are contested. Not financial advice.

Frequently asked questions

What is the Carbon Tax / UK ETS?

The UK Emissions Trading Scheme, introduced in 2021, caps emissions from power, heavy industry and aviation. Covered firms must cut emissions or buy allowances — an effective price on carbon.

Is scrapping it government policy?

No — it's a Conservative opposition proposal, not law. The current government instead plans to link the UK scheme with the EU's.

Would it lower my energy bills?

Possibly indirectly. Supporters say removing carbon costs on power and industry could ease prices; critics say the savings are uncertain and revenue could shift abroad. There is no direct household rebate.