The Carbon Price Floor was introduced in 2013 in order to ensure that the price on carbon in the UK remained in line with our decarbonisation targets – the carbon price the EU Emissions Trading Scheme was delivering wasn’t (and still isn’t) high enough.
The original target was to achieve a price of £30 per tonne of carbon dioxide in 2020 with a starting price of about £16 per tonne.
However in the 2014 Budget the Government announced that prices would be capped at £18 per tonne from 2016 to 2020 to “limit the competitive disadvantage faced by business and reduce energy bills for consumers.”
This decision came after concerted lobbying by business and industry.
The Confederation of British Industry was a major player in this lobbying effort.
Rhian Kelly, the CBI’s director for business & environment explained in 2013 that “British business supports an ambitious but credible EU-wide emissions reduction target…” and that
“This must be underpinned by long-term reform of the EU ETS, creating a robust carbon price across Europe – thus making the UK’s Carbon Price Floor a redundant backstop – with improved provisions to protect vulnerable industries.”
This was – and still is – misleading equivocation.
We need policies that demonstrate the UK is taking a leadership role in the EU decarbonisation effort.
Without the cap on the CPF the UK would be in a stronger position to drive forward the long term reform of the EU ETS.
The cap on the CPF demonstrates the power that industry has to stall action on climate change at policy level.
What can be done to ensure UK climate policy is protected from lobbying by business and industry?
We need to challenge the business/industry lobby and ensure our voices are heard in support of decisive action on climate change by policymakers.