The challenge
Prices on the EU carbon market were seen as too low to cut power sector emissions, while the UK had binding emission targets under its 2008 Climate Change Act.
The case
In 2013 the UK introduced the Carbon Price Support, a tax on fossil fuels used to generate electricity, which rose from about £5 per tonne of CO₂ in 2013 to £18 in 2017. Economist Marion Leroutier compared UK power sector emissions with a 'synthetic' UK built from other European countries and found that the tax cut emissions by 20.5% to 26% per year on average between 2013 and 2017, by making plants run less and pushing some high-emitting plants to close. Coal's share of UK electricity fell from 40% in 2012 to 1.8% in 2020, according to the government. In 2021 the government brought its deadline for ending coal power forward to October 2024, and the closure of Britain's last coal-fired power station, Ratcliffe-on-Soar, in autumn 2024 made it the first major economy to stop burning coal for power.
Why it worked
The carbon tax cut emissions by making high-emitting plants run less and pushing some to close, especially plants already at risk of closure under EU air quality rules. A firm end date for coal power followed.
Sources
- Leroutier, M. (2022). Carbon pricing and power sector decarbonization: Evidence from the UK. Journal of Environmental Economics and Management, 111, 102580.
- UK Government (2021). End to coal power brought forward to October 2024 (press release).
- UK Government (2024). New coal mining licences will be banned (press release).
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