The right-leaning think tank has called on government to scrap the controversial carbon price floor in the new Treasury budget due in July, telling the Telegraph that the tax risks the UK’s security of supply and damages the prospects for developing carbon capture and storage technology.
In an opinion column for the national newspaper research fellow Tony Lodge blamed the carbon tax for the recent closure announcements for the Longannet and Ferrybridge coal-fired power plants, describing them as a “body blow” to the UK electricity system.
“British security of energy supply will be hugely diminished; importantly there are no shiny new equivalent-sized power stations being built to replace Ferrybridge, Longannet plant or any further closures the loss of those may prompt,” he said.
“The Coalition hoped that new gas-fired power stations would be built, but this hasn’t happened and the much-heralded new nuclear power station at Hinkley Point in Somerset is at best a decade away. Wind and solar will not plug the hole,” he warned.
As old plants close the development of CCS could be hindered because “they will need the skills and infrastructure transfer from old plants to new”, Lodge added.
The controversial carbon tax was introduced in 2010 by the Conservative-led Treasury in the face of subdued carbon price signals from the flagging EU emissions trading system.
Currently the tax stands at £18.08 per tonne of CO2 emitted in addition to the ETS meaning that UK coal generators pay a total of £23.38 per tonne emitted while the EU is just £5.30.
While coal-fired generators and major energy users are understood to oppose the tax, green campaigners have also criticized the tax saying it doesn’t reduce emissions and amounts to little more than a ‘cash grab’.
“Next month’s Budget represents an excellent opportunity to abandon the tax, boost energy security and put Britain on a level playing field with the rest of Europe,” Lodge said.