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Carbon Price Support Consultation

Volume 520: debated on Thursday 16 December 2010

The Government have today published a consultation to encourage investment in low-carbon electricity generation.

“Carbon price floor: support and certainty for low-carbon investment” is an innovative approach to achieving the UK’s energy and climate policy objectives. Giving greater support and certainty to the price of carbon in the power sector will encourage further investment in low-carbon electricity generation. This can be achieved through reform of the climate change levy (CCL) and fuel duty to enable fossil fuels used by power generators to be taxed on the basis of their carbon content.

The proposal is part of a wider package of reforms to the electricity market, covering a number of commitments set out in the coalition agreement. These wider reforms are set out in a consultation on electricity market reform, also published today by the Secretary of State for Energy and Climate Change.

The consultation invites interested parties to submit their views on a range of implementation issues by 11 February. The Government will then publish their response, by Budget 2011. The Government intend to introduce legislation for the proposals in the 2011 Finance Bill (and subsequent secondary legislation) and to bring the proposals into effect from 1 April 2013.

Copies of the document have been deposited in the Libraries of both Houses and are available in the Vote Office and on the Treasury website at