Recommendation 34

The Carbon Price Support is one of a number of policy interventions which has contributed to the large reduction in coal used by electricity generators based in Britain.70 However, the Mineral Products Association told us that the environmental outcome of the Carbon Price Support must be set against its wider impact on competitiveness, especially considering the impact of carbon leakage (which is the offshoring of carbon generating activities in response to domestic policies to control emissions).71 As explained above, the Carbon Price Support gives a price advantage to imports over domestic electricity generation from fossil fuels. As there are large untapped renewable energy resources in the UK, we asked HM Treasury whether it was happy for the UK to carry on importing electricity. HM Treasury said that BEIS lead on energy policy, and it had a constant dialogue with BEIS on energy issues, including renewable energy. However, it could not say what the government’s position was on imported electricity or whether it had discussed with BEIS the impact of the Carbon Price Support on imports.72