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Reported government plans to freeze the carbon floor price in this week’s Budget have united the nuclear and renewables industries in one last show of opposition.
Freezing the green levy would undermine investor confidence, the Nuclear Industry Association and Renewable UK warned in a joint letter to chancellor George Osborne.
The Treasury is expected to hold the levy at its 2015/16 level of £18 a tonne of carbon dioxide instead of hiking it steeply to the end of the decade as planned.
The tax was supposed to support investment in low carbon generation but has come under attack from heavy industries who argue it pushes up their energy costs and damages their competitiveness.
Defending the carbon floor price escalator, the trade bodies said a freeze would jeopardise the £110 billion of investment government says is needed in energy infrastructure by the end of the decade.
They wrote: “Retrospective policy changes not only have a negative impact on existing investments but also risk damaging the UK energy sector’s reputation as a stable destination for international investment.”
That united front does not extend to support for a new fleet of nuclear power plants, according to the Sunday Times. Energy minister Michael Fallon asked top renewable executives to write to Brussels in favour of government’s support package for Hinkley Point C, the paper reported.
The UK’s plans to guarantee EDF Energy £92.50/MWh for power generated at the plant need state aid approval from the European Commission to go ahead.
An industry source said they were “bemused and appalled” at the request and said Fallon was “living in cloud-cuckoo land”.
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