SSE and Drax have signed an open letter to chancellor Philip Hammond calling for a “robust and strong” carbon price following the recent publication of the Clean Growth Strategy (CGS).
The long-awaited document, which set out how the government plans to meet its commitments under forthcoming carbon budgets, stated that the Autumn 2017 Budget – slated for 22 November – will provide details on carbon prices for the 2020s.
“At the moment the industry only have sight of the carbon price to April 2021. This is welcome but we now need to understand the trajectory of the UK’s carbon price into the 2020s, particularly as without it generators have less clarity,” the letter states.
Signed by SSE and Drax, alongside Intergen, VPI Immingham and Sandbag, it welcomes the inclusion of carbon pricing within the CGS but urges Hammond to use next month’s budget to reaffirm the government’s commitment to carbon pricing.
The letter adds that carbon pricing would allow the UK to maintain its “leadership position in greening our economy” by reducing emissions from the power sector as businesses redirect investment away from fossil fuel technologies.
It also reacts to a recent report from Aurora Energy Research and says a strong carbon price would deliver the government’s planned phase out of coal by 2025, as well as accelerating the transition to unsubsidised low carbon generation.
Finally, it would incentivise low carbon flexibility needed to keep the electricity system secure and in line with carbon budgets.
With other countries looking to follow the example set by the UK when it introduced a carbon price in 2013, the signatories claim the UK will now need to go further to ensure the country remains ahead of others.