Miu, Luciana

Umer, Huzefah

Hill, Dan

Sayers, Jamieleigh

Kulaga, Daryna

Tyrer , David

2026-05-20T11:44:18Z

2026-05

In Scotland, the buildings and transport sectors have not seen reductions in carbon emissions at the same rate as other sectors. Using the UK’s 7th carbon budget as a baseline, we model two carbon tax levels (£25/tCO₂ and £75/tCO₂) and two cap-and-trade system scenarios (with and without a soft price cap) in the period 2027 – 2045, with both partial and full cost passthrough to consumers. . The highest anticipated emissions reduction is in the higher £75 carbon tax scenario where costs are fully passed on to customers. The lowest emissions abatements were in the lower £25 carbon tax scenario, where costs are partially passed on. Our modelled ETS prices generate less emissions abatement than steadier price signals under a carbon tax. The model shows that most additional emissions reductions occur in the buildings sector. Costs are more significant for lower-income households. The disproportionate impact on low-income consumers can be alleviated through revenue recycling.

https://era.ed.ac.uk/handle/1842/44725

https://doi.org/10.7488/era/7240

en

Logika Group

2026-07-31

Carbon pricing

carbon tax

emissions trading schemes

revenue recycling

ETS2

just transition

How can carbon pricing help achieve Scotland’s 2045 targets?

Technical Report

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