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Home/Clarity on carbon pricing is needed in Autumn Budget – a cut risks a resurgence of coal

Clarity on carbon pricing is needed in Autumn Budget – a cut risks a resurgence of coal

Ahead of the upcoming Autumn Budget (2018), new analysis by Aurora Energy Research suggests that maintaining a higher carbon price is key to decarbonising the UK electricity sector in a timely and cost-effective manner, and achieving the Government’s stated intent of phasing out coal power generation.

Key insights from this new analysis include:

  • Carbon pricing has been successful in driving coal out of the UK electricity mix, with roughly an 80% reduction in coal generation since the introduction of the Carbon Price Support in 2013
  • Reducing the carbon price risks triggering a revival of coal generation, undermining the achievement of carbon targets
  • Analysis by Aurora Energy Research suggests that cost increases from a higher carbon price are modest, and partly offset by a cleaner energy mix and reduced subsidies
  • The recent surge in price of EU Emissions Allowances means that GB generators face the highest overall carbon prices seen to date
  • The government faces a difficult decision in the upcoming Autumn Budget about the future of the carbon price in the period to 2025 and beyond
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