24 Mar 2011 10:03:15
Carbon floor price plans announced in Budget
A carbon floor price is to be introduced for power generation from April 2013, starting at £16 per tonne of CO2
Chancellor George Osborne announced the measure in his Budget yesterday, saying the initiative is intended to "drive investment in the low carbon power sector".
By 2020, the floor price will almost double to £30 per tonne of CO2
Dr Jeff Chapman, chief executive of the Carbon Capture and Storage Association, said: "This revenue from the fossil fuel industry can provide the investment funding to support the transition to a low carbon economy using CCS [Carbon Capture and Storage]."
The Budget also reiterated the coalition's support for CCS, explaining it intends to fund the four demonstration projects through general taxation, rather than a dedicated CCS levy.
Climate Change Agreements (CCAs) are to be extended to 2023, while a consultation on simplification plans is due to be published in the summer.
From April 2013, the levy discount on power for those taking part in the scheme is set to be increased from 65 to 80 percent. The government said this is so it can "continue to support energy intensive businesses exposed to international competition".
John Cridland, director general of the Confederation of British Industry, said the support through the CCAs is "particularly important" given the introduction of the carbon floor price.