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Carbon Floor Price

Volume 515: debated on Thursday 16 September 2010

In the Budget, Her Majesty’s Treasury and Her Majesty’s Revenue and Customs announced that the Government will publish proposals this autumn to reform the climate change levy to provide more certainty and support to the carbon price. Subject to consultation, the Government will bring forward relevant legislation in the Finance Bill 2011.

I thank the Secretary of State for that encouraging answer because, of course, that will be a prelude to more growth and more jobs. How can we be sure that those measures will stimulate investment in green technology?

I am a great believer in the virtues of the market and of the price mechanism, and I am sure that my hon. Friend is, too. It is fairly well established that if the price of something goes up, the supply of it tends to follow. If we provide a carbon price floor, as we intend to do, we anticipate that that will send precisely the sort of price signals to suppliers that will bring forward the capacity that we need to provide us with energy security in a low-carbon way.

When the right hon. Gentleman has discussed the matter of a carbon floor with the Treasury, has he raised the possible intervention contingency that might be necessary for a UK carbon floor? If he has, have they directed him to talk to the EU about common border-based carbon taxes?

The discussion with the Treasury will get under way later, after the comprehensive spending review. The hon. Gentleman will understand that the Treasury is otherwise engaged in a very serious mopping up of the legacy problems that we have already discussed. Later in the year, as part of the public consultation, we will go through all those issues, including the issues that impact on our EU partners.