Abolish carbon taxes and CBAM

Policy baseline

The pledge refers to carbon taxes and CBAM, but does not define the full list. The central case removes a substantial share of carbon-pricing receipts while leaving some legacy levies intact.

• Receipts depend on which instruments are repealed.
• Energy-intensive firms gain directly.
• Emissions and future abatement costs rise.

Core trade-offs

Firms and consumers facing carbon costs may gain lower prices. The Exchequer loses receipts and emissions incentives weaken, increasing the likelihood of higher future abatement costs or missed targets.

• Energy-intensive users gain cost relief.
• Treasury loses environmental receipts.
• Climate targets become harder to meet.

Fiscal impact by 2028-29

+GBP 1.5bn to +GBP 6.0bn. Central estimate: +GBP 3.0bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main cost is lost carbon-pricing receipts.
• Lower business costs may recover small receipts.
• Instrument list is not specified.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Some exposed firms benefit; clean-sector jobs and investment face pressure.
• Wages: Limited broad wage effect; sectoral gains and losses differ.
• Prices: Some energy and industrial prices may fall if cost reductions pass through.
• GDP / productivity: Near-term relief possible; long-run productivity negative if clean innovation falls.

Assessment

Carbon-pricing repeal may lower some business costs, but it removes a revenue source and weakens incentives to reduce emissions. Without an alternative abatement plan, future fiscal and regulatory costs likely rise.

Confidence: Low. Revenue baselines exist, but the policy does not define which carbon instruments are abolished.

Main risks

• Target failure: Removing carbon prices makes emissions targets harder to meet without heavier regulation.
• Investment loss: Clean-energy and industrial-decarbonisation investment may fall.
• Border risk: Repealing CBAM while others use border measures can disadvantage UK exporters or importers.

Safeguards

• List every tax and levy repealed.
• Publish replacement emissions pathway.
• Separate household relief from industrial relief.

Academic evidence

UK government evidence

Sources

• PolicyLens methodology: Abolish carbon taxes and CBAM Internal - PolicyLens, 2026
• Economic and fiscal outlook: October 2024 Fiscal forecast - Office for Budget Responsibility, 2024
• Direct effects of illustrative tax changes bulletin UK government statistics - HM Revenue and Customs, 2025
• Economic and fiscal outlook: March 2026 Fiscal forecast - Office for Budget Responsibility, 2026
• Carbon Taxes and CO2 Emissions: Sweden as a Case Study Academic article - Andersson, American Economic Journal: Economic Policy, 2019
• Instrument Choice in Environmental Policy Academic article - Goulder and Parry, Review of Environmental Economics and Policy, 2008
• The Impacts of Environmental Regulations on Competitiveness Academic review - Dechezlepretre and Sato, Review of Environmental Economics and Policy, 2017
• Our Plan for Britain Party policy source - Conservative Party, 2026

Other Conservative policies

• Cut welfare spending by GBP 23bn
• Cut 132,000 Civil Service posts
• Create a 150,000-removals force
• Restrict social housing to UK nationals
• Cut overseas aid by GBP 7bn
• Cut net-zero subsidies by GBP 1.6bn
• Abolish stamp duty on main homes
• Abolish rates for high-street firms