Durkan says carbon levy would distort market

Speaking during a debate on the plans to promote a carbon price floor and support low-carbon investment, Mr Durkan warned the Minister that if levied in Northern Ireland the carbon tax would have “a hugely distorting impact on the single electricity market.”

Mr Durkan argued the market was based in statute north and south and had its own regulatory framework.

He asked: “Does he recognise not only that the carbon floor price will harm consumers and industry in Ireland, but that distorting the single electricity market at this stage would damage the prospect of this island harnessing offshore energy from Ireland in the future?”

The Minister said the special case of Northern Ireland was being looked at. He said: “The hon. Gentleman is right to say that the electricity market arrangements in Northern Ireland are quite distinct from those in England, Scotland and Wales.

“There is effectively a single market between Northern Ireland and the Republic, and we need to be aware of and respect that. I gather that discussions are ongoing at official level and elsewhere to ensure that there are no unintended consequences of the changes that we introduce.”

Chancellor of the Exchequer George Osborne announced in Budget 2011 the introduction of a carbon price floor from April 1, 2013 as the first step to wider reform of the electricity market.

The Government proposes to introduce a carbon price support mechanism to support investment in low-carbon generation. The Government has decided that this is best achieved by the CCL and fuel duty being levied on all fossil fuels used in the UK to generate electricity.