Tony Lodge calls for Carbon Price Floor delay (The Times )

CPS Researcher Tony Lodge published a letter in The Times (£) on the 9th March

“Sir, Alice Thomson rightly calls on the Chancellor to play a bigger role in energy policy in the interests of industry and the consumer. The present debate over wind energy warrants examination of the fuel sources that have provided Britain’s electricity over the past month, a period which traditionally necessitates high winter energy demand. It is also important to understand how the Government is looking to further tax those fuel sources which are meeting electricity demand and the effects this will have on household and industry costs.
Official statistics show that during February Britain relied heavily on coal to generate electricity; averaging 47 per cent of supply. Gas came second with 26 per cent, nuclear at nearly 19 per cent and wind supplied just over 3.5 per cent. Wind’s intermittency also means it cannot meet important peaks in demand.

In light of the UK’s ongoing heavy reliance on coal — and, increasingly, gas — for the generation of electricity the Chancellor should review and delay his intention to impose a unilateral UK carbon price floor on electricity generators from 2013. This will see UK emissions taxed at £16 per tonne of carbon dioxide emitted, while the price for carbon on the Continent looks set to remain roughly at just €8 per tonne.

As fuel poverty rises and new nuclear investors hesitate to provide an in-service delivery timetable for new nuclear power plants, the introduction of a UK carbon price floor trajectory from 2013 will significantly increase energy bills for consumers and industry while delivering no environmental benefit as emitters in Europe will soak up any carbon savings made in the UK.
The carbon price floor is a tax-raising measure which should be reconsidered and instead effort put behind strengthening the EU Emissions Trading Scheme and supporting a future EU-wide carbon price floor so as not to place the UK at a huge economic and social disadvantage with the rest of Europe.

Tony Lodge
Research Fellow
Centre for Policy Studies

Date Added: Friday 9th March 2012