The Carbon Price Floor (CPF)

The Carbon Price Floor is a taxation policy which is anticipated to replace the current Climate Change Levy.  This will result in a tax on the use of energy in the hands of the UK organisations which are subject to the European Union emissions trading scheme – namely, the electricity generators and industrial sectors (iorn and steel, chemical and refining).  This is in contrast to the CCL which is a direct tax on the production of energy which is an attempt to tax greenhouse gas pollution.

The main reason for the UK Government introducing a Carbon Floor Price is to encourage investment in lower carbon technologies and is designed to increase the cost of pollution and so reduce the carbon intensity of the UK’s industrial energy reliance. From 1st April, 2013 the Government has set the price at £16 per tonne rising at a constant rate to £30 per tonne by 2020.

Although the policy may encourage investment in renewable energy, such as wind and solar power,  it may have the effect of increasing the reliance on nuclear.  By reducing electricity usage in the first instance, Carbon Management Services are helping minimise the financial and environmental impact of  companies’ energy requirements.