The Carbon Price Floor That Actually Changed Behavior

Episode 33 of Climate Economics examines the UK's carbon price floor, introduced in 2013, which set a minimum price on carbon emissions for power generation. Unlike the EU's more volatile Emissions Trading System, the UK's floor provided a stable price signal that drove a massive shift from coal to gas and renewables. Lucas and Luna break down the specific number — the price floor started at roughly £16 per tonne and rose to £30 by 2020 — and how it slashed coal's share of UK electricity from about 40% in 2012 to under 2% by 2020. They compare this to the EU's carbon price, which languished below €10 for years, and discuss whether the US could adopt a similar approach. The episode also touches on the political feasibility of carbon pricing in a high-inflation environment and what the UK's experience teaches us about using price floors to drive real decarbonization. #CarbonPricing #UKCarbonPriceFloor #Decarbonization #CoalPhaseOut #EmissionsTrading #ClimatePolicy #Economics #UKEnergyTransition #CarbonTax #GreenPolicy #EuropeanUnion #PowerGeneration #Inflation #PoliticalEconomy #ClimateEconomics #FexingoBusiness #BusinessPodcast #CarbonEmissions Keep every episode free: buymeacoffee.com/fexingo