Does the electricity market need a carbon tax?

The carbon floor price could lead to consumers paying more than they need to, according to the Chief Operating Officer of RWE npower. Kevin McCulloch told ELN that the price […]

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By Tom Gibson

The carbon floor price could lead to consumers paying more than they need to, according to the Chief Operating Officer of RWE npower.

Kevin McCulloch told ELN that the price introduced in the Electricty Market Reform also favoured certain generators more than others: “The guys who don’t have to pay the tax, who are the nuclear players, they have a positive double whammy hit- they charge more and they don’t have the tax burden to boot.”

Since the UK Government introduced its electricity market reforms, many in industry have criticised the carbon floor price pillar for fixing the market by offering an advantage to nuclear and renewables producers.

Kevin McCulloch added that the reforms weren’t exactly fair: “If you take a fixed price on carbon, that’s fantastic if I’m a low carbon user already. For instance, if I’m an energy business that has a majority of nuclear. RWE, who is weaning itself off fossil fuels, have to pay the penalty of that tax.”

The Government has come under fire for indirectly subsidising nuclear power. Back in May the Energy Select Committee argued the new generation of nuclear power would be helped by the reform.

Mr McCulloch said that the EMR was needed, but the array of policies risked becoming unbalanced: “Without a doubt the electricity needs reform- we’re at the end of an era. If you’re going to make the break into nuclear and CCS etc, you have to create a playing field that gives technology independence- you don’t back winners as a government, let the market decide. We want mechanisms that bring forward a diverse mix of energy and at the moment it’s very much skewed torward renewables in particular.”

Other EMR stories:

Large on-site renewables “squeezed out” in EMR

The true cost of the EMR

Solar snub in Roadmap sparks confusion