- Britain’s Carbon Price Support – currently set at £18 per tonne of CO2 – has been frozen until April 2028 and will then be abolished, exchequer secretary Dan Tomlinson told Parliament.
- Tomlinson said the levy succeeded in driving coal off the grid; Britain’s last coal‑fired power station closed in 2024, and the government is ramping up renewables to meet its goal of largely decarbonising electricity by 2030.
- Generators will still pay for emissions under the UK Emissions Trading System, where permits trade near £49 per tonne.
The UK government is dismantling one of its key carbon‑pricing tools. In a written statement to Parliament, exchequer secretary Dan Tomlinson announced that the Carbon Price Support (CPS) – a top‑up tax on power‑plant emissions introduced in 2013 – will be scrapped from April 2028.
At £18 per tonne of CO2, the levy is levied on top of the UK Emissions Trading System (ETS) and has not changed since it was frozen in last year’s budget. Tomlinson argued that the policy is “no longer fit for purpose” because it has achieved its aim of driving coal off the grid.
Britain’s last coal‑fired power plant closed in 2024, and the government is accelerating the rollout of offshore wind, solar and nuclear power to meet its target of largely decarbonising electricity by 2030.
The CPS removal forms part of a broader effort to reduce consumer energy bills in the wake of the Iran war price shock. Supporters say eliminating the levy could marginally lower electricity prices and provide clearer signals for investors as Britain builds out low‑carbon infrastructure.
Critics, however, warn that scrapping the price floor could slow the transition if gas prices fall or if emissions trading prices weaken.
The government counters that the UK ETS will continue to impose carbon costs on fossil‑fuel generators, with permit prices recently hovering around £49 per tonne. Still, carbon‑market prices can be volatile, and investors will need to monitor how fluctuations affect the economics of gas‑fired projects.
The decision to abolish the CPS thus marks a shift from using price signals to deter fossil fuel generation toward relying on direct investment in renewables and nuclear.
For households, any near‑term savings will depend on how effectively the government achieves its clean‑power goals; for the industry, the change underscores the importance of tracking carbon‑market dynamics and anticipating further policy adjustments as Britain seeks to navigate the energy transition.
