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Osborne expected to freeze carbon tax in Budget

The Chancellor is expected to announce a freeze on the carbon price floor in the Budget, The Daily Telegraph has reported.

The carbon price floor (CPF) is a tax on fossil fuels used to generate electricity. 

It came into effect on 1 April 2013. It changes the existing Climate Change Levy (CCL) regime, by applying carbon price support (CPS) rates of CCL to gas, solid fuels and liquefied petroleum gas (LPG) used in electricity generation.

According to The Daily Telegraph, critics of the “carbon price floor” say it is a pointless “stealth” tax that will increase the risk of blackouts by forcing coal plants to switch off before new power plants are ready to replace them.

The Telegraph said the tax will push up UK electricity prices, leading to job losses for struggling British industries and further increasing costs for hard-pressed bill-payers.

The carbon price floor sets a minimum price for every tonne of carbon dioxide emitted. It is supposed to rise steeply over the next two decades to encourage construction of new low-carbon power plants like nuclear and wind farms while making it too expensive to run coal-fired power plants.

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