The UK government will scrap a £18 per tonne carbon charge on fossil fuel power stations from April 2028, ending a levy that helped drive coal plants off the grid. The Department for Business and Trade said the carbon price support fee had successfully contributed to the closure of Britain's coal-fired power plants, with the last one shutting down in 2024.

The move follows a pledge by Nigel Farage's Reform UK, which is leading national opinion polls, to remove the fee if it wins the next election. Large electricity users and the wider industry broadly welcomed the announcement, though some groups said the government still needed to do more to bring down energy costs. Adam Berman of Energy UK said the fee was crucial in "driving coal off the grid" but the government is right to recognise it's no longer needed.

The policy risks widening the gap between UK and EU carbon costs, potentially exposing British electricity exporters to carbon border taxes being introduced by Brussels. UK ministers are in talks with the EU about relinking carbon pricing schemes and hope to achieve parity before the top-up is removed. Carbon prices have risen from less than €10 in 2013 to roughly £50 per tonne today.