Government WILL guarantee a Floor Price for Carbon

A floor price for carbon is essential for nuclear power to be profitable without public subsidy. So one of the most important part of the final text of the coalition agreement, published today, is that the Conservative policy to guarantee a floor price for carbon will be part of the new government's programme.

The relevant section of the coalition agreement states:

"We will introduce a floor price for carbon, and make efforts to persuade the EU to move towards full auctioning of ETS permits."

This will help both nuclear power and other forms of low carbon energy to get established.

The full text of the Energy and Climate Change section of the coalition agreement reads as follows:


10. ENERGY AND CLIMATE CHANGE

The Government believes that climate change is one of the gravest threats we face, and that urgent action at home and abroad is required. We need to use a wide range of levers to cut carbon emissions, decarbonise the economy and support the creation of new green jobs and technologies. We will implement a full programme of measures to fulfil our joint ambitions for a low carbon and eco-friendly economy.

• We will push for the EU to demonstrate leadership in tackling international climate change, including by supporting an increase in the EU emission reduction target to 30% by 2020.

• We will seek to increase the target for energy from renewable sources, subject to the advice of the Climate Change Committee.

• We will continue public sector investment in carbon capture and storage (CCS) technology for four coal-fired power stations.

• We will establish a smart grid and roll out smart meters.

• We will establish a full system of feed-in tariffs in electricity – as well as the maintenance of banded Renewables Obligation Certificates.

• We will introduce measures to promote a huge increase in energy from waste through anaerobic digestion.

• We will create a green investment bank.

• We will retain energy performance certificates while scrapping HIPs.

• We will introduce measures to encourage marine energy.

• We will establish an emissions performance standard that will prevent coal-fired power stations being built unless they are equipped with sufficient carbon capture and storage to meet the emissions performance standard.

• We will cancel the third runway at Heathrow.

• We will refuse permission for additional runways at Gatwick and Stansted.

• We will replace Air Passenger Duty with a per-flight duty.

• We will introduce a floor price for carbon, and make efforts to persuade the EU to move towards full auctioning of ETS permits.

• Through our ‘Green Deal’, we will encourage home energy efficiency improvements paid for by savings from energy bills. We will also take measures to improve energy efficiency in businesses and public sector buildings. We will reduce central government carbon emissions by 10% within 12 months.

• We will reform energy markets to deliver security of supply and investment in low carbon energy, and ensure fair competition including a review of the role of Ofgem.

• We will instruct Ofgen to establish a security guarantee of energy supplies.

• We will give an Annual Energy Statement to Parliament to set strategic energy policy and guide investment.

• We will deliver an offshore electricity grid in order to support the development of a new generation of offshore wind power.

• We will encourage community-owned renewable energy schemes where local people benefit from the power produced. We will also allow communities that host renewable energy projects to keep the additional business rates they generate.

• As part of the creation of a green investment bank, we will create green financial products to provide individuals with opportunities to invest in the infrastructure needed to support the new green economy.

• We will work towards an ambitious global climate deal that will limit emissions and explore the creation of new international sources of funding for the purpose of climate change adaptation and mitigation.

• Liberal Democrats have long opposed any new nuclear construction. Conservatives, by contrast, are committed to allowing the replacement of existing nuclear power stations provided that they are subject to the normal planning process for major projects (under a new National Planning Statement), and also provided that they receive no public subsidy.

• We will implement a process allowing the Liberal Democrats to maintain their opposition to nuclear power while permitting the Government to bring forward the National Planning Statement for ratification by Parliament so that new nuclear construction becomes possible. This process will involve:

– the Government completing the drafting of a national planning statement and putting it before Parliament;

– specific agreement that a Liberal Democrat spokesperson will speak against the Planning Statement, but that Liberal Democrat MPs will abstain; and

– clarity that this will not be regarded as an issue of confidence.

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