Chancellor Keeps Carbon Tax Fixed until 2020

Chancellor of the Exchequer Philip Hammond announced during his first Autumn Statement that UK Carbon Price Support rates (CPS) of £18.00/tCO2e would be unchanged until 2020, uprating with inflation during 2020-21.

The move sees no action from the new Chancellor on the carbon price support rates which are currently in the first year of a five year freeze, with a delay in decision on future years. The government stated that it will “continue to consider the appropriate mechanism for determining the carbon price in the 2020s” but provided no further details beyond 2021 in the statement and only reaffirmed previously announced rates which Mr Hammond said would “provide certainty to business”. The delaying of the action on UK carbon tax rates drew criticism from both those supporting the levy and those who want it scrapped.

There had been speculation that the tax would be scrapped by the Chancellor, which is estimated to add £36 per year to household bills which is roughly 7%. Industrial users have criticised the tax and called for its abolition citing that it has made electricity prices uncompetitive due to the increasing gap between the carbon price faced by UK consumers to those abroad as EU ETS carbon prices are substantially lower than was expected when the tax was introduced.

In a statement that was relatively light in energy news, with decisions on the future of the Levy Control Framework into the next decade also deferred until next year’s budget. The government plans to continue to engage with stakeholders in the development of an Emissions Reduction Plan, which is set to be published at the beginning of 2017.

Source: Cornwall Energy

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