In 2012, the UK ranked 20th out of a list of 33 rich countries in terms of low-carbon electricity use. In 2017, it jumped to 7th. No other country has ever climbed up the rankings so quickly. How did the UK manage it? It imposed a carbon tax. The carbon tax, or the carbon floor price as policymakers refer to it, was introduced in 2013. It stands at 18 ($25) per ton of carbon dioxide emitted in producing electricity. As a member of the EU's emissions trading scheme (for now), UK electricity providers also pay a market-based price for carbon credits, which is about 5 per ton of CO2. After the tax was introduced, it became much more expensive to burn coal, which produces about twice the emissions per unit of energy as natural gas. The carbon floor price only applies at the point of generation. That means, only UK producers are required to pay it. In normal conditions, this would mean that the interconnectors would have been able to include bids from cheaper dirty fossil fuel generation outside the UK. As it happens, however, France, Norway, and Belgium generate a very high proportion of electricity from low-carbon sources. Even the Netherlands, which only gets 15% of its electricity from renewable sources, can provide a lot of low-carbon electricity on windier days. With the carbon floor price probably set to increase after 2020, the clear direction the UK's electricity market is headed is away from fossil fuels.
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