The chancellor of the exchequer’s Spring budget revealed little detail on the future of key energy sector policies.
Described by critics as an “empty” budget, Philip Hammond’s reveal for the energy sector was that a modified carbon tax regime would begin in 2021/22. It will be based on a ‘total carbon price’ with taxes then set at a later date, but details will not be made public until the Autumn Statement.
Likewise the replacement for the Levy Control Framework, the budget envelope intended to control the amount of subsidy paid to renewable energy companies.
A new set of controls will be brought into play, but what they look like is not yet clear. According to the budget document:
“The government recognises the need to limit costs to businesses and households as the UK decarbonises its energy supplies. The existing Levy Control Framework has helped to control the costs of low carbon subsidies in recent years, and will be replaced by a new set of controls. These will be set out later in the year.”
On the future of the carbon tax:
“The government remains committed to carbon pricing to help decarbonise the power sector. Currently, UK prices are determined by the EU Emissions Trading System and Carbon Price Support. Starting in 2021-22, the government will target a total carbon price and set the specific tax rate at a later date, giving businesses greater clarity on the total price they will pay. Further details on carbon prices for the 2020s will be set out at Autumn Budget 2017.”
See the budget document here.