Consumer champions Which? have called on Government to scrap the carbon price floor because it will increase costs unfairly on consumers. The consumer group has demanded the policy be scrapped from the 2012 budget because it is “ineffective” and will not guarantee investment in low carbon generation.

The government’s figures estimate the floor price will add around 1-2% to electricity bills in 2013, the equivalent of £278 million. This is set to rise to up to 6% by 2016. Richard Lloyd, Which? executive director said: “People are already struggling to manage their energy bills, so it’s unacceptable for the government to pile yet more pressure on household budgets.”

“It’s in all of our interests to tackle climate change, but the government cannot write a blank cheque on consumers’ behalf to pay for it.”

The carbon floor price, which Energy Minister Charles Hendry admitted to ELN last year was a tax, aims to benefit energy companies that generate low-carbon electricity, like nuclear and wind, but penalises ones that produce high emissions.

Tim Yeo, Chairman of the Energy Select Committee, said the floor price could result in heavy industry moving abroad: “Unless the price of carbon is increased at an EU-wide level, taking action on our own will have no overall effect on emissions other than to out-source them.”

The Institute for Public Policy Research (IPPR) has also estimated that the carbon floor price will push a further 30,000 to 60,000 households into fuel poverty from 2013. Which? wants a new focus on different policies that instead will guarantee low carbon investment.