The UK government has published its proposals to set a minimum carbon price as a way of encouraging investment in low-CO2 generation. The proposals have resulted in part from the response to its consultation document, published earlier this year whcih set out the government’s intention to provide greater support and certainty to the price of carbon in the power sector, to encourage investment in low-carbon electricity generation. In line with the rates set out in its Budget last week, to come into effect on 1 April 2013, the government confirms that:
• The target carbon price for 2013-14 will be around £16 per tonne of carbon dioxide (tCO2), which is £19.16 in 2013-14 prices.
• Taking this rate and subtracting the forecast Emissions Trading Scheme (ETS) rate for 2013-14 (£14.21/tCO2), the support rate for 2013-14 will be £4.94/tCO2.
• Prospective support rates for 2014-15 and 2015-16 are £7.28/tCO2 and £9.86/tCO2 respectively. Budget 2012 will confirm the carbon price support rates for 2014-15, and set out indicative rates for the subsequent two years.
• In line with the consultation, the price floor will target £30 per tonne of carbon dioxide in 2020, rising to £70 in 2030 (based on 2009 prices).
The consultation document and the response to consultation can be found at:
<http://www.hm-treasury.gov.uk/consult_carbon_price_support.htm</em>>
