CLIMATE STRATEGIES RESPONSE TO HM TREASURY AND HM REVENUE AND CUSTOMS CONSULTATION ON CARBON PRICE FLOOR

The response argues that while a UK carbon price floor aims to increase the viability of low-carbon investments, a unilateral approach may be discounted by investors due to regulatory instability and inconsistency with the EU Emission Trading Scheme (EU ETS). It suggests that strengthening the EU ETS targets would provide greater clarity, regulatory stability, and market scale for low-carbon technologies like CCS and nuclear power, compared to a national tax-based supplement.

• A UK-specific supplementary carbon price may be less effective in attracting strategic attention from utilities and investors because many companies operating in the UK are active across Europe and prioritize the emission trajectory and carbon price of the EU ETS for their overall portfolios.
• The proposed carbon price floor faces risks of being discounted by strategic investors due to the perceived lack of robustness in tax-based policies, citing the abandonment of the UK fuel price inflator during the 2000 fuel protests as an example.
• A unilateral UK carbon price floor could undermine the joint European approach to low-carbon development by encouraging other countries to pursue national supplements, which would reduce the demand for CO2 allowances and increase the volatility of EU ETS prices.
• For Carbon Capture and Sequestration (CCS), the document asserts that the necessary scale for application beyond demonstration projects can only be achieved through the European power market, making the credibility and stringency of the EU ETS the primary driver for strategic investment.
• Investment in nuclear power is viewed as risky under a national carbon tax because the long-term commercial viability (over 20 years) depends on a tax scheme that may change, whereas a more stringent EU ETS target would reduce this exposure.
• Survey data indicates that current EU ETS stringency is insufficient to drive change, with approximately 40% of European manufacturing companies continuing 'business as usual' and only 4% expecting fundamental changes to operations and investment.

APA

Neuhoff, K. (2010). CLIMATE STRATEGIES RESPONSE TO HM TREASURY AND HM REVENUE AND CUSTOMS CONSULTATION ON CARBON PRICE FLOOR. Climate Strategies. https://climatestrategies.org/wp-content/uploads/2014/11/consultation-carbon-price.pdf

Chicago

Neuhoff, Karsten. CLIMATE STRATEGIES RESPONSE TO HM TREASURY AND HM REVENUE AND CUSTOMS CONSULTATION ON CARBON PRICE FLOOR. Climate Strategies, 2010. https://climatestrategies.org/wp-content/uploads/2014/11/consultation-carbon-price.pdf.

Wikipedia

{{cite press release |last1=Neuhoff |first1=Karsten |title=CLIMATE STRATEGIES RESPONSE TO HM TREASURY AND HM REVENUE AND CUSTOMS CONSULTATION ON CARBON PRICE FLOOR |publisher=Climate Strategies |date=11 February 2010 |url=https://climatestrategies.org/wp-content/uploads/2014/11/consultation-carbon-price.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{neuhoff2010climate, author = {Neuhoff, Karsten}, title = {{CLIMATE STRATEGIES RESPONSE TO HM TREASURY AND HM REVENUE AND CUSTOMS CONSULTATION ON CARBON PRICE FLOOR}}, publisher = {Climate Strategies}, year = {2010}, month = feb, url = {https://climatestrategies.org/wp-content/uploads/2014/11/consultation-carbon-price.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }