Britain to scrap carbon tax on energy production - Aims to ease pressure on rising bills
Britain’s carbon tax on electricity generation will be scrapped from April 2028, the government said, as it seeks to rein in rising electricity prices for households and businesses.
Domestic energy prices are set to rise sharply from July, after wholesale power prices rose due to the conflict in Iran and as the regulator’s price cap enters a new pricing quarter from July to September.
Britain introduced the tax, called the Carbon Price Support, on emissions from power plants in April 2013 as part of its efforts to meet climate targets by making it more expensive to generate power from polluting fossil fuels, particularly coal.
The government had frozen the tax at 18 pounds ($24) per metric tonne of carbon dioxide until April 2028 in last year’s budget.
Britain’s last coal-fired power station closed in 2024 and the government has been increasing the use of renewable energy as it strives to meet its target to largely decarbonise the electricity sector by 2030.
According to officials, with our Clean Power 2030 mission, we are already reducing our electricity system’s reliance on unsustainable fossil fuels and no longer need this additional tax to provide incentives to the system to decarbonise our grid.
The tax is paid by fossil fuel generators on top of the costs under the country’s Emissions Trading System, where reference prices currently trade at around £49 per tonne.
Analysts said the CPS adds around £7 per megawatt-hour to wholesale electricity prices, with the removal of the tax equating to a cost saving of around £21 per year on an average household electricity bill.
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