Finance
Britain to Scrap Carbon Tax on Electricity Generation From April 2028
Published by Global Banking & Finance Review®
Posted on April 16, 2026
2 min readLast updated: April 16, 2026
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The UK will abolish its Carbon Price Support (CPS)—a carbon tax on fossil-fuel electricity generation—effective April 2028, ending its £18/tonne freeze since 2016 and signaling evolving climate policy.
Britain to scrap carbon tax on electricity generation from April 2028
Overview of Britain's Carbon Price Support Policy
By Susanna Twidale
Background and Introduction of the Carbon Tax
LONDON, April 16 - Britain's carbon tax on electricity generation will be scrapped from April 2028, the government said on Thursday as it seeks to curb soaring energy costs.
Britain introduced the tax, called the Carbon Price Support, on emissions from power plants in April 2013 as part of its efforts to meet climate targets, by making polluting fossil fuel power production, particularly coal, more expensive.
Tax Rate and Previous Policy Decisions
The government had frozen the tax at 18 pounds ($24) per metric ton of carbon dioxide until April 2028, in last year's budget.
Government Statements on Policy Change
"CPS has done its job and is no longer fit for purpose. Coal has been driven off the grid," Dan Tomlinson, exchequer secretary to the treasury, said in a written statement to parliament announcing the change.
Impact on Energy Sector and Climate Goals
Closure of Coal Plants and Shift to Renewables
Britain's last coal-fired power plant closed in 2024 and the government has been ramping up renewable power as it strives to meet a target to largely decarbonise its electricity sector by 2030.
Clean Power 2030 Mission
"With our Clean Power 2030 mission, we are already reducing our electricity system’s reliance on volatile fossil fuels and we no longer need this additional tax to provide incentives in the system to decarbonise our grid," Tomlinson said.
Additional Costs and Emissions Trading System
The tax is paid by fossil fuel electricity generators on top of costs under the country's Emissions Trading System, where benchmark prices currently trade around 49 pounds per ton.
Additional Information
($1 = 0.7381 pounds)
(Reporting by Susanna Twidale; Editing by Toby Chopra and Emelia Sithole-Matarise)
Key Takeaways
- •The CPS, introduced in April 2013 to curb emissions from power plants, has been frozen at ~£18 per tonne since at least 2016 and remains so through 2027–28. (en.wikipedia.org)
- •Scrapping the CPS from April 2028 marks a significant policy shift likely to reduce electricity costs and reflects the policy’s diminished role now that coal generation has virtually disappeared. (britishprogress.org)
- •This comes amid broader carbon pricing reforms, including the upcoming UK Carbon Border Adjustment Mechanism (CBAM), set to start in January 2027 targeting imports of aluminium, cement, fertiliser, hydrogen and iron & steel. (icaew.com)
References
Frequently Asked Questions about Britain to scrap carbon tax on electricity generation from April 2028
1When will Britain scrap its carbon tax on electricity generation?
Britain will scrap its carbon tax on electricity generation from April 2028.
2What is the carbon tax known as in the UK?
The carbon tax on electricity generation in the UK is called the carbon price support.
3When was the UK's carbon price support tax introduced?
The UK's carbon price support tax was introduced in April 2013.
4At what rate had the carbon tax been frozen until April 2028?
The carbon tax had been frozen at 18 pounds per metric ton of carbon dioxide until April 2028.
