What does the ‘carbon floor price’ mean? More emissions and fewer jobs

After the Conservative Party Conference, Fraser described this statement in George Osborne’s speech as the Osborne Doctrine: ‘Let’s at the very least resolve that we’re going to cut our carbon emissions no slower but also no faster than our fellow countries in Europe.’ The Government’s current climate policy clearly fails that test, as I set out for this site at the time, and there is no more egregious violation than the carbon floor price.

It is one of those policies that can sound reasonable in theory: the EU Emissions Trading System creates a carbon market. That market produces a carbon price that is supposed to encourage business to invest in cutting emissions by doing things like building nuclear plants. But the price is too volatile, which undermines that incentive, so you set a floor that it can’t fall below.

It doesn’t work out that way in practice.