Standard content for Members only
To continue reading this article, please login to your Utility Week account, Start 14 day trial or Become a member.
If your organisation already has a corporate membership and you haven’t activated it simply follow the register link below. Check here.
“Could the carbon tax be in for more political tinkering?”
The UK’s carbon floor price offers that rare treat: an energy market policy that unites the views of the sector regardless of the usual divisions.
Perhaps it has something to do with the fact that it is a decision born of the Treasury and not the Department of Energy and Climate Change, but either way its reception is an almost unanimous, collective eyeroll.
Environmentalists rightly point out that its effectiveness as a tool to reduce carbon emissions is negligible. Without a cap, generators are free to buy their way out.
Businesses quite rightly point out that needing to buy their way out of their emissions when the rest of Europe only coughs up enough to cover the cost of the EU’s Emissions Trading System (ETS) is a bad thing for competitiveness.
But now that the ETS is showing tiny green shoots of recovery and a new government is expected in a couple of months, could the carbon tax be in for further political tinkering?
This, of course, brings us to the third corner of the industry that takes issue with the tax: the UK’s power traders. Political risk is never a good thing when confidence is needed to boost liquidity and knowing that an ever-increasing element of the wholesale price depends on the whims of Treasury wonks is an uncomfortable place to be.
Then again, being mired in debt is probably not a comfortable situation for the government either, so it’s possible the Treasury’s cash-grab might survive the election after all.
Please login or Register to leave a comment.