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Carbon Price Floor (Government Response)

Volume 526: debated on Wednesday 30 March 2011

The Government have today published the Government’s response to the consultation document on the carbon price floor.

The consultation document “Carbon price floor: support and certainty for low-carbon investment” set out the Government’s proposal to provide greater support and certainty to the price of carbon in the power sector to encourage investment in low-carbon electricity generation.

Budget 2011 announced the introduction of a carbon price floor from 1 April 2013. The floor will start at around £16 per tonne of carbon dioxide (tCO2) and follow a linear path to target £30/tCO2 in 2020 (both in 2009 prices). The carbon price support rates in 2013-14 will be equivalent to £4.94/tCO2.

The consultation sought views on how best to implement the proposal. A number of issues were raised by respondents throughout the consultation. These are addressed in the Government’s response.

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 on the Treasury website at www.hm-treasury.gov.uk.