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UK importers fear power price hike after French carbon tax in 2017

27 Jun 2016

Power importers in the United Kingdom are expecting the introduction of a minimum carbon price for the French power sector to raise electricity prices by about 8% in 2017, which should make French power sales to the UK less attractive and might cut them by up to 30%. In November 2015, the French government approved an €8.5/tCO2 increase in the carbon tax levied on fossil fuel consumption (i.e. oil products, gas and coal) since 2014, as of 2017: the "contribution climat énergie" (CCE) will then reach €30.50/tCO2 in 2017, in line with the target to raise the tax to €56/tCO2 by 2020.

However, national electricity transmission network operators RTE and National Grid are mitigating these fears, as the tax would apply to fossil-fuel power generation in France (limited share in the power mix) and as French prices should remain lower than the British ones, which were 45% higher in 2015.

Over the past six years, electricity exports from France to the UK have more than doubled, offsetting a declining domestic power generation, and accounting for up to 4% of the British energy consumption in 2015.

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