LONDON (Reuters) - A Conservative British government would impose a carbon tax on electricity generation, to create a clear incentive for long-term investment in renewable energies, the party said on Friday.
Unveiling its energy strategy, the opposition Conservative party said it would reform an existing Climate Change Levy (CCL), imposing a levy instead on the carbon content of power production.
Utilities would only have to pay the levy if the European carbon price fell below the level of the levy, which would thereby act as a floor price for carbon emissions in Britain.
That was intended to combat volatile prices in the European Union emissions trading scheme, which some companies say has been a brake on low-carbon investment.
"Ultimately the cost of achieving a diverse and resilient energy system has to be paid for by consumers," the party said in a strategy document launched by leader David Cameron.
"Reducing that cost depends on incentivizing the necessary investment in the most economically efficient way -- which is what this reform will deliver," the document said.
By setting a floor price for carbon, the levy would provide a reliable signal for investment in all forms of low carbon energy including nuclear power, it said.
The Conservatives have been in opposition for the past 13 years but they are hoping to eject the ruling Labor Party and come back into office by winning a national election expected on May 6. If they succeed, Cameron will be prime minister.
The Conservatives are ahead in the opinion polls, although since the start of the year their lead over Labor has shrunk and many polls suggest Britain could be heading for a "hung parliament" in which no single party has overall control.
The campaign has not been officially launched yet, but the Conservatives have been releasing some policy proposals.
"Unless we diversify our energy sources, unless we upgrade our energy networks, unless we pay as much attention to energy efficiency as we do to energy production, then our energy supplies will be neither secure nor sustainable," Cameron said in a statement.
The policy document, entitled "Rebuilding Security", contained 12 key objectives including the carbon levy.
Other proposals were to facilitate nuclear power, establish capacity guarantees in the electricity market and for gas supplies, and create a Green Investment Bank that would aim to attract and package investment opportunities in energy.
(Reporting by Estelle Shirbon, editing by Anthony Barker)
