The Carbon Price Support, which is an additional “pay to pollute” tax faced by generators in Great Britain, was frozen until 2020 in the 2014 budget in response to the falling cost of carbon allowances in Europe. Utility Week understands that an announcement on its future beyond 2020 could be made in March’s budget.
Jeremy Nicholson, director of the Energy Intensive Users Group, told Utility Week: “This measure doesn’t reduce emissions. It just means that more of the emissions reductions occur in the UK and less elsewhere in Europe.”
A Treasury spokesman said: “Government will be making an announcement about rates beyond 2019/20 in due course. No decision has yet been made.”
The Daily Telegraph reported today that energy companies Centrica and EDF support an increase in the tax because of their interests in low-carbon generation. Centrica declined to confirm its position and EDF has yet to comment.
Other energy companies are understood to be opposed to the tax. A spokesperson for Eon told Utility Week: “From the outset we have been absolutely clear that we believe the carbon price floor is an unnecessary charge and that ultimately it unnecessarily adds to consumers electricity bills.
“There has been some progress in terms of addressing the negative impact it has on large industrial businesses and their attempts to compete on the world stage but we believe more still needs to be done to remove the impact of this unnecessary burden on UK households.”