On 16 April, HM Treasury announced to the UK Parliament that the Carbon Price Support (CPS) for power generation will be discontinued from April 2028, shifting the UK fully to a single‑instrument carbon price via the UK ETS.
The CPS was introduced in 2013 as part of the Carbon Price Floor (CPF) mechanism. Its aim was to top up the then-very-low carbon price of the EU ETS – which the UK decoupled from in 2021 following Brexit – effectively setting a minimum carbon price for the UK power generators and providing a stronger financial incentive for the decarbonization of the power sector. The CPS is paid by the owners of power generating stations and combined heat and power (CHP) stations and is passed on to consumers, including industrial producers. As the UK ETS matured and coal was largely phased out of the UK power mix, the government regarded the CPS as having fulfilled its purpose. The current CPS rate of £18/tCO₂ will remain in place until April 2028.
The formal removal of the CPS will be legislated throughout a future Finance Bill. With the CPS gone, the UK ETS Auction Reserve Price (ARP) – adjusted for inflation from £22 to £28 in 2026 – will serve as the sole remaining price floor mechanism.
