U.K. FREEZES CARBON PRICE FLOOR

03/24/2014

U.K. Chancellor of the Exchequer George Osborne froze a tax on carbon emissions from electricity generation in an effort to cut consumer energy bills. Gas bills in U.K. households rose by 41% from 2007 to 2013, putting pressure on the government to reduce energy costs. According to Osborne, the freeze could save U.K. businesses as much as four billion pounds (US $6.6 billion) by April 2019, while families could save an average of 15 pounds (US $24) per year. The carbon price floor, which was set to increase in annual increments, was introduced in 2013, and some economists have criticized Osborne for changing the policy so soon. Nicholas Stern, a former government economist, argues that such lack of stability creates confusion for investors, and a letter from Nuclear Industry Association and industry group RenewableUK said the freeze will “undermine confidence and will make it more difficult to secure the necessary investment.” Furthermore, while the freeze may help the biggest carbon polluters, it is likely to hurt utilities that rely more heavily on renewables. For the full story, see http://www.smh.com.au/business/carbon-economy/uk-freezes-carbon-tax-plan-for-electricity-sector-20140320-353iy.html.