Four British power firms call for carbon tax extension

• 8 years ago (2016-09-27)
• David Flin

Europe 1089 Nuclear 659

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Four British power generators, SSE, Drax, Vitol owned VPI Immingham, and Calon Energy, have called on the British government to maintain the country’s carbon tax until at least 2025, putting them at odds with industrial groups who want it scrapped. The carbon tax is paid by power generators for each tonne of CO2 they emit, and this was frozen in 2014 at £18/tonne until 2021. Philip Hammond, British Chancellor, is expected to provide details on what will happen to the tax after 2021 in his autumn statement on November 23.

Most British power companies support the carbon tax. Its cost is passed on to consumers through higher electricity bills, meaning companies with low-carbon generation such as nuclear or renewables can then benefit from the higher electricity prices.

A spokesman for SSE said: “We are calling on the UK government to maintain the carbon price floor beyond 2021, by keeping the carbon price support rate at least at its current level until 2025 to maintain secure and reliable energy supplies.”

Industrial groups have called for the government to abandon the tax, saying it has made electricity prices in Britain uncompetitive.

Richard Warren, Senior Energy and Environment Policy Adviser at Britain’s manufacturers’ organisation EEF said: “The UK has some of the highest electricity wholesale prices in the EU, and this is in large part due to the carbon price floor.” EEF estimates that the carbon tax adds around £8-10 per MWh to British wholesale power prices, which currently trade at around £40/MWh.

The power firms said the carbon tax encourages them to invest in low-carbon power generation, and said it is central to the country’s efforts to meet its climate change goals.