Budget summary

For major energy users, the key element of the budget was the introduction of a carbon floor price – a worlds first. 

From the 1st April 2013 companies generating electricity must pay at least £16 per tonne of CO2 they produce.  Currently the market price for carbon is decided by the price of permits within the EU’S Emissions Trading Scheme.

However, this can lead to price uncertainty, which could deter investment in renewable energy, while some believe prices are too low at times, which doesn’t incentivize power generators to reduce their CO2 production.

To stop this carbon floor price aims to ensure the cost of emitting CO2 never falls below a certain level. From the 1st


April 2013 that level is £16 per tonne, and the government has said that this price will ‘follow a linear path’ until 2020 when it will reach £30 per tonne. The Government hopes this will provide the incentive for billions of pounds of new investment in our dilapidated energy infrastructure.

Some major energy users fear it will lead to an increase in energy bills.