The UK should slash tariffs on environmentally friendly goods and services in order to fulfil its twin goals of championing free trade and protecting the environment.
A new report from the Centre for Policy Studies (CPS) says that removing such barriers to trade will minimise the costs of adopting green solutions and business practices.
At the same time, the government should look to reduce and finally abolish tax breaks for fossil fuels and work to introduce carbon border tariffs, it adds.
Right now, a number of sectors benefit from reduced rates of tax on the use of such fuels, like domestic power in the UK, which is taxed at a 5.0 per cent of VAT rather than the full 20 per cent.
Such advantages, the paper says, should be removed, ensuring that resources are allocated more efficiently.
These exemptions should be removed “as quickly as is politically feasible”, it says.
Coming ahead of the UN’s flagship climate conference COP26, which kicks off in November in Glasgow, the report says that the UK should lead on efforts to counter the two most pressing questions facing the world today – climate change and the recovery from the Covid-19 pandemic.
The two issues will also be discussed at the upcoming G7 summit in Cornwall, which kicks off this weekend.
Eamonn Ives, head of energy and environment at the CPS and the author of the report, said: “International free trade and protecting the environment are often seen as contradictory endeavours.
“Our report argues that they can and do support each other – and makes a series of recommendations which the Government could adopt to ensure its newly independent trade policy is one that delivers both economic and environmental prosperity.”
The paper comes as the UK seeks to strike a number of comprehensive free trade deals with global economies following its departure from the EU.
In order to back up its environmental credentials, Ives said that the UK should also look the join the Agreement on Climate Change, Trade and Sustainability, which was set by countries including New Zealand.