Carbon Price Support rates, Levy Control Framework and future carbon prices were the key points in yesterday's Budget announcement in regards to the energy sector.
Chancellor Phillip Hammond presented the Autumn Statement to Parliament yesterday afternoon and although announcements related to the energy market were minimal there were a few key points of interest. The statement outlines the government's plans for the nation's economy based on forecasts, as well as setting out tax and spending plans.
Announcements related to the energy sector include:
- No change to the cap on Carbon Price Support rates of £18t/CO2, with inflation to 2020-21 taken into account.
- The government will continue to consider an appropriate mechanism which will determine the carbon price in the 2020s.
- The future of the Levy Control Framework will be outlined in Budget 2017.
The government re-iterated its commitment to lowering carbon emissions, while reducing energy bills. It also confirmed that it will continue to work with stakeholders to develop an emissions reduction plan.
Chancellor Hammond confirmed that the government will look carefully over the coming months at the functioning of key markets, including the retail energy market, to make sure they are functioning fairly for all consumers.
Meanwhile, the future of the Levy Control Framework will be outlined in the next Budget announcement; this framework caps the forecast cost of various policies funded via levies on energy bills.
Martin Pibworth, SSE Managing Director for Wholesale responded to the government's commitment to carbon pricing and said: SSE has consistently advocated for carbon pricing as a cost effective way to meet the UK's energy objectives. It therefore welcomes the Government's reaffirmed commitment to carbon pricing by maintaining the Carbon Price Floor to April 2021. SSE will work with Government and partners to make the case for carbon pricing into the 2020s.