Sir Keir Starmer has been warned that his plan to join an EU net zero scheme “undermines” Britain’s Brexit freedoms. The UK could link its own carbon credits scheme to Brussels’ system as part of a plan to “strengthen ties with Europe”.

Critics claimed the move would push up the cost of producing electricity from gas-fired power plants, which are the UK’s second-largest source of power – ultimately adding to the costs faced by British industry and increasing household bills. Sam Hall, director of the Conservative Environment Network, said: “If the Government decides to align with the EU on carbon pricing, it will undermine our Brexit freedoms, economic growth, and even our environmental ambitions. We should retain our sovereignty to design a scheme that works best for the UK.

“Brexit has given us the flexibility to allow companies to reduce their carbon emissions in ways that benefit our economy and their bottom line. The UK desperately needs to plant more trees and grow our forests. If we keep an independent scheme and deliver the last government’s proposals to include woodland, we could unlock more private finance for creating forests and restoring our green and pleasant land. By aligning with the EU, we will lose this opportunity.

“While the UK should retain sovereignty, we shouldn’t abandon emissions trading schemes entirely. It is an important part of reducing emissions whilst growing the economy. It is a far more business-friendly and affordable approach to reducing emissions than restrictive red tape and bans.”

The Prime Minister is planning to use a summit in May to align the UK and EU emissions trading schemes as part of his “reset” with Brussels.

Since Brexit, when the UK launched its own emissions trading schemes, British carbon credits have been significantly cheaper than those in Europe, because the Government’s cap on the overall quantity of emissions has been higher.

Tory MP Nick Timothy warned that linking the schemes would cost British households an extra £112 a year in more expensive goods and electricity from gas-fired plants.

He described the carbon credits plan as “mindless Milibandism” and said the Government should realise “actions have consequences” for voters.

Speaking to The Telegraph, he said: “Analysis shows that we could be heading towards an extra £112 on the cost of living because of European alignment.

“So long as policy races ahead of technology, this means higher energy bills, fewer jobs and weaker growth.

“If the Government signs up for the EU’s cap and trade scheme, then we will lose control and allow carbon prices to hit eye-watering levels. This is going back on what was promised to voters during the election.”