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British companies will pay higher business energy prices than those in Europe, after the new carbon price floor came into effect this week. Considered a “stealth tax” by many business and even environmental groups, the scheme, set in 2011, begins at £16 per ton of carbon emitted for this year, but will rise to £30 by 2020. Yet carbon prices in the remainder of the European Union have recently dropped below €5 per ton, a record low. This new UK price floor could net over £3 billion in the next three years but, instead of the money being pumped back into green energy technologies (which the scheme is intended to support), it will actually be added to the Treasury. To deflect criticism of the energy price increases, DECC, (Department of Energy & Climate Change) stated last week that, even though utility bills will continue to rise, they'll be 11% lower by the year 2020 than they would without the latest energy policies. Critics within the business sector fear that the price floor threatens the competitiveness of UK companies, no more so than for those in the energy-intensive sectors, manufacturing for instance. At UHL, we feel it certainly appears to be an uneven playing field when the EU won't boost their own carbon prices. However, the EU is intending to vote on a plan to potentially increase the carbon price through a system know as backloading. Analysts hope this may create a more stable situation, at least temporarily, as carbon prices may reach €6 a ton. The coalition has stated it would compensate businesses who are at risk in the coming years, with a £250 million support package; details are yet to be finalised. Further support has been offered for heavy, energy-intensive industries and they could be made exempt from the separate scheme known as Climate Change Levy.