Chart of the week | Where next for the Carbon Price Support?

Among the issues taxing government at present, perhaps unexpectedly, is the rate of Carbon Price Support in the coming budget. Only last November the government were “confident” that the Total Carbon Price, the combination of EU Emissions Trading System (EU ETS) and Carbon Price Support prices, were “at the right level”. Additionally, the government said it would “continue to target a similar Total Carbon Price until unabated coal is no longer used”. This would be 2025 according to the current coal closure policy.

The EU ETS prices were around €7/t, with a Carbon Price Support rate of £18/t, the total carbon price came to £24/t. Roll on 10-months prices have rocketed to €20/t, supported by reforms to the EU ETS. Our Chart of the week looks at the reason behind the total carbon price now 50% higher than what was the government had considered the “right level”.

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