UK to Scrap Carbon Price Support in Move to Simplify Energy System
The Government has announced that the UK’s Carbon Price Support (CPS) will be abolished from April 2028, marking a significant shift in the country’s approach to carbon pricing and energy taxation.
In a statement to the House of Commons on 16 April 2026, Dan Tomlinson, Exchequer Secretary to the Treasury, confirmed that the policy—introduced in 2013—has “done its job” and is no longer necessary in the current energy landscape.
CPS, a tax applied to fossil fuels used in electricity generation, was originally designed to reinforce the carbon price beyond levels set by the UK Emissions Trading Scheme. Its primary aim was to accelerate the shift away from coal and encourage investment in lower-carbon energy sources.
According to the Government, those objectives have largely been achieved. Coal has effectively been phased out of the UK electricity grid, while the emissions trading system has matured and now operates with a tighter cap to drive decarbonisation.
The decision to remove CPS reflects a broader effort to streamline the UK’s carbon pricing framework. Ministers argue that maintaining both mechanisms is no longer necessary, particularly as the country advances towards its Clean Power 2030 target, which seeks to further reduce reliance on fossil fuels and expand renewable energy generation.
Another key factor behind the move is cost. Scrapping CPS is expected to help offset the financial impact of the forthcoming British Industrial Competitiveness Scheme (BICS), which aims to lower electricity bills for energy-intensive industries as part of the Government’s wider industrial strategy.
By easing pressure on manufacturers, the policy is intended to improve competitiveness while supporting the transition to a cleaner energy system.
Legislation to formally remove CPS will be introduced in a future Finance Bill. The Government maintains that the change strikes a balance between sustaining progress on decarbonisation and ensuring that energy costs remain manageable for both businesses and households.
The announcement signals a new phase in the UK’s energy policy—one that places greater reliance on market-based mechanisms and a maturing emissions trading system, while scaling back older instruments that are seen as no longer essential.
