Budget 2014: Osborne caps carbon tax as part of his 'Budget for a resilient economy'
The Chancellor George Osborne has confirmed a cap on the Carbon Price Floor at £18 per ton of CO2 from 2016-2017 to the end of the decade.
In his 2014 Budget speech today, the Chancellor confirmed what many had predicted, a freeze on carbon tax, which Osborne said will help "British families and manufacturers save on their energy bills".
According to the Government, the cap on the Carbon Price Floor will save a mid-size manufacturer around £50k annually. However, those driving the transition to a low-carbon economy said the decision could be the death of the polluter pays principle.
The cap was part of the Chancellor's £7bn package to cut energy bills to create a "Budget for a resilient economy", which again included backing for the emerging nuclear and shale gas industries.
Osborne did, however, mention his support for renewables but said little else, focusing more on cutting energy bills for businesses and households.
However, he announced a £3bn compensation package to energy intensive industries, who will not have to pay the costs of the renewables obligation or feed-in tariffs, both designed to support renewable energy generation.
The Chancellor said this is likely to save companies around £15,000 per year, and households £15 per year, on their energy bills.
"I'm extending the existing compensation scheme for energy intensive industries for a further four years to 2019-20," he announced.
Commenting on the Budget, UK-GBC director of policy and communications said: "Any real hope that the Chancellor is committed to the green agenda faded long ago but what remains deeply disappointing is that he doesn't recognise a growth opportunity when he sees one. There continues to be a complete blind spot on the role that energy efficiency has to play in reducing consumer bills over the long-term, and generating home-grown jobs.
"A one-off £15 cut to household bills will be quickly forgotten - what is needed is long-term incentives to reduce the demand for energy in the first place," he added.
Following the recent floods, the Chancellor's Budget unsurprisingly announced flood defence funding, which was set at £140m.