The UK Chancellor Philip Hammond announced the spring budget last week and with it a number of policies which effect the energy industry. The UK will be making a transition into a low carbon economy, which will cost around £12.6bn by 2020 and the government plans to recover this money by increasing environmental taxes.
The two main increases will be placed into the Contract for Difference (CfD) and Capacity Market (CM) schemes. CfD was introduced by the Government to support renewable energy and has been increasing over recent years, CM was introduced to secure the supply of electricity within the UK.
These increases will impact business energy prices, with over half of the price made up of taxes such as CfD and CM. The other portion made up of wholesale energy costs, which have also been increasing over the past 12 months.
Although the UK Government has pledged to make the transition into a low carbon economy, the budget did come under criticism for not taking enough action on energy efficiency. The budget was also criticised for not taking any action on air pollution or renewable energy. This has lead critics to ask if the Government are really dedicated to a low carbon economy, or if it is political rhetoric while the Brexit process takes place.