Industry association Energy UK has stated that Chancellor Phillip Hammond needs to use this month’s Autumn Statement to clarify the future of the Carbon Price Floor (CPF).
The UK was the first EU country to introduce a CPF, currently set at £18 a tonne which is four times the value of an EU carbon permit. This cost is then passed on to energy consumers through the wholesale price of power.
Energy UK wrote to Hammond before the release of the statement saying that the CPF had served to compensate for the weak carbon price signals from the EU Emissions Trading Scheme, and that businesses and investors needed certainty over its role beyond 2020.
The letter said: “While the continuation of the Carbon Price Floor needs to account for the impact on power traded through interconnectors and those adversely affected by CPF, clarity on this key element of domestic UK energy policy would be a strong signal for investors and a strong commitment to our low-carbon future.”