Definition of carbon price floor
A carbon price floor came into effect on 1 April 2013. The carbon price floor taxes fossil fuels (solid fuels, gas and LPG) used in electricity generation under climate change levy (CCL) and fuel duty. These fossil fuels are subject to a ‘carbon price support rate’ based on carbon content which creates in essence a carbon price floor. As oil used in electricity generation is not subject to CCL, the fuel duty which can be reclaimed is subject to a restriction in order to create the same effect.