Robin Cohen, head of Deloitte's economic consulting practice commenting on today's Budget said:
"Today's announcement that following consultation, a carbon price floor for electricity generation will be introduced from 1 April 2013 is a significant move. The carbon price floor will start at around £16 per tonne of carbon dioxide and increase to £30 per tonne in 2020 to help drive investment in the low-carbon power sector. But a substantial gap between the costs of unabated CCGT and new nuclear will still remain at £30/tonne. This means that the Feed-in-tariffs for low carbon generation, that the Government is currently consulting on, will need to play a substantial role in lifting revenues to the level necessary for low carbon investors.
"Also significant is the fact that Climate Change Agreements (CCAs) will be extended to 2023. The climate change levy discount on electricity for CCA participants will be increased from 65 to 80 per cent from April 2013 to continue to support energy intensive businesses exposed to international competition. A consultation on proposals to simplify the agreements will be published by summer 2011 and it remains committed to providing public funding for four Carbon Capture and Storage (CCS) demonstration plants. However, consistent with its objectives for tax simplification, it will not proceed with the CCS levy. It will instead fund its commitments to CCS demonstrations from general taxation."
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