As part of today’s Budget 2014 announcement, Chancellor George Osborne revealed that there will be no further increase in the Carbon tax.
The move will be welcome news for energy intensive industries and is likely to provide some light relief for bill payers, who will not see their bills rise by as much as they would have without the freeze.
Osborne also stated that he wants the UK to reduce the cost of energy by investing in energy sources such as nuclear and shale gas.
Average home could save £20 per year
Speaking to Reuters, Roland Vetter, Head of Research at investment firm CF Partners said the move would cut £6.1 per megawatt hour from wholesale electricity prices over the next six years, compared to what they would have been, had the government continued to increase the carbon tax.
Vetter added that the freeze was unlikely to have a dramatic effect on household bills. He estimated that, at best, the average home would save £20 per year on their energy costs, as a result of the new policy.
Environmental groups likely to speak out
The carbon tax scheme, which was first introduced in April 2013, requires companies to pay a certain amount of money for any gas or fossil fuels which they consume. The aim of the initiative is to encourage investment in green energy by penalising those who pollute.
Environmental groups are likely to speak out against Osborne’s announcement, as it could effectively diminish the level of incentives for companies considering the move to renewable energy sources.