UK CO2 price floor compensation receives EU approval

The EU Commission on Wednesday (May, 21) endorsed the British plan to compensate certain energy-intensive industries for higher energy costs resulting from the UK’s carbon price floor. According to official release, the plan is in line with EU state aid rules approved in early April.

The carbon price floor, which was raised in April to 9.55 pounds (€11.79) per ton of carbon dioxide, is a tax on high-carbon fuels such as coal, gas and oil, used to produce electricity.

In February the UK government notified plans to compensate certain energy-intensive users for the indirect costs. “The compensation partially offsets the higher electricity costs, similar to what is done for the costs of the EU Emission Trading Scheme (ETS)”, the Commission said, allowing industries including steel, paper, plastics and chemicals to be reimbursed with up to 80 percent of the costs related to the carbon floor price and the EU ETS.

The Commission excluded compensation for sectors such as cement, ceramics and glass, which it deemed to be less exposed to higher energy prices. Officials of excluded sectors denounced they will lose  tens of millions of pounds in relief funds and asked the British government to resubmit an application to the Commission.