U.K.’s CO2 Floor Uses ‘Trick’ to Circumvent EU Law, RWE Says

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The U.K. is using a regulatory “trick” to introduce its carbon tax on fossil-fueled power generation, which would not have been allowed under European Union emissions trading law, said the U.K. unit of RWE AG.

Britain is using an exemption under the EU Energy Products Directive to proceed with its tax, which it named a carbon floor, John McElroy, director of policy at RWE Npower, said in an interview at the Platts emissions conference in Brussels.

“That’s the trick that they have used,” he said Oct. 6. “It’s not permitted under the EU emissions trading system.”

Chancellor George Osborne in March fixed a carbon tax of 4.94 pounds ($7.71) a metric ton from 2013 to raise revenue and prompt investment into power generation such as wind farms and nuclear. Wind turbines are subsidized and the coalition government has said no subsidy will be given to new nuclear power stations. The government indicated the tax, part of the Conservative-Liberal Democrat coalition agreement when they took office in May 2010, may rise to 9.86 pounds in 2015.

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