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The UK's Carbon Price Floor almost doubles on Wednesday (1-April-2015) from £9.54/tonne to £18.08/tonne, meaning the total carbon price payable by UK power stations hits about €32/tonne, when including the EU ETS price. This is likely to significantly impact on the economics of coal. The German government has also recently proposed a "Climate Contribution" scheme to tackle the country's stubbornly high carbon intensity, in a way that will bring in carbon pricing additional to the EU ETS price.

Sandbag have written an analysis piece comparing the proposed German "Climate Contribution" to the UK's "Carbon Price Floor". It concludes that the German policy is looking to achieve the same objective in broadly the same way as the UK policy i.e. reducing the carbon intensity of the power sector through a carbon price instrument, in order to meet ambitious domestic GHG targets. However, Germany is achieving it with a much lower impact on electricity prices.

The analysis is available to read here in English or German.

Dave Jones, Sandbag Power Analyst comments: "The lack of a carbon price in the EU is driving Member States to pursue new policies to tackle their coal addiction with the UK and Germany now both pursuing similar measures. It will be interesting to see which delivers change most cost effectively. The ETS still needs fixing but clearly Member States can and must address their addiction to cheap coal."

EU ETS Power Sector Emissions to 2013