The report was released on 28 April by the high-level coalition of business, MPs and NGOs. It calls for the introduction of a carbon floor price through taxation of emission allowances in the EU emissions trading scheme (EU ETS) in the first budget of the new administration.
It says allowance prices in the EU ETS have been hit by generous free allocations and the recession. They are unlikely to reach the €33 per tonne of carbon dioxide equivalent by 2020 needed to encourage low-carbon investment.
The group is also calling for a higher EU emissions reduction target of 30% by 2020 relative to 1990 levels.
The report says higher carbon allowance prices will be needed in the Carbon Reduction Commitment trading scheme, in trades between Climate Change Agreements, and ultimately in the non-traded sector. It says the government should commit to fundamental green-fiscal reforms, and could do much more to effect change through its £175bn-a-year public procurement budget.
But the group also warns against reliance on carbon pricing alone. It says a wider framework of regulation and incentives is urgently needed to boost innovation and ensure the UK becomes a world leader in resource efficient products and services. The Low Carbon Industrial Strategy needs to be upgraded to address the need for new jobs and key skills, it says.
The report argues for an immediate national energy-efficiency action plan and commitment to mandatory carbon reporting, including all product life-cycle emissions, to boost transparency and competition. And it says the climate policy framework needs simplifying, with more consistent carbon reporting standards.
And the report welcomes commitments by the three main parties to a public/private Green Investment Bank, to kickstart the £260bn of private investment needed by 2020 to transform energy networks. But it says far greater funding should be made available from EU ETS auction revenues.