Energy giants call for post-Brexit carbon price certainty in 'Net-Zero Budget'

Energy giants Drax, Orsted and SSE have penned a joint letter to Chancellor Sajid Javid calling for the Government to outline post-Brexit carbon pricing mechanisms, warning that it is crucial to the resilience of business and acts as a key indicator for investors.

The energy companies have called for the CET to be set for 2020 and that it is comparable with recent EU ETS pricing

The energy companies have called for the CET to be set for 2020 and that it is comparable with recent EU ETS pricing

Alongside think tank Sandbag, the energy companies have called for clarity on the Carbon Price Support (CPS) rate - which taxes fossil fuels used to generate electricity - for April 2021 and beyond. Specifically, the firms called on the Chancellor to use the upcoming Budget on 6 November as the first “Net-Zero Budget”, that outlines the spending that will spur the nation towards its net-zero emissions target for 2050.

“The prolonged uncertainty regarding the UK’s carbon pricing future as it exits the EU reiterates the need for the upcoming Budget – at whatever final date is chosen – to provide some much-needed certainty in a potentially turbulent period for businesses across the UK,” the letter states.

“With its approach to carbon pricing, the Powering Past Coal Alliance and its Net Zero commitment, the UK has been a leader in global efforts to meet the ambition of the Paris Agreement by phasing out coal, as well as incentivising low carbon energy development and helping drive cost reductions. This leadership should continue at the first ‘Net Zero Budget’."

Under the current withdrawal process from the European Union (EU), a Carbon Emissions Tax (CET) will replace the EU Emissions Trading System (ETS). But if the UK does leave the EU without the deal, the energy companies have called for the CET to be set for 2020 and that it is comparable with recent EU ETS pricing, which surpassed €25 per tonne for the first time this summer.

As part of the UK’s net-zero targets, the Committee on Climate Change, which created the recommendation report at the Government’s request, stated that reaching net-zero would “require a strong and rising carbon price, in order to induce changes to both short-term behaviour and longer-term investment decisions”. 

Price is right

In relation to energy companies, carbon prices for electricity generation should more than treble by 2050 and VAT rates on domestic energy use hiked to help drive emissions off the grid, according to a study from the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

Last month, senior sustainability representatives at major corporates called on national governments to implement "meaningful and rapidly-escalating" carbon pricing, in order to support businesses on the road to net-zero.

Representatives from DSMSchneider Electric and Salesforce listed carbon pricing as top of their green policy wishlist.


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Matt Mace



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