This tax on the emissions of power companies "will do nothing to reduce carbon and threatens to damage the reputation of policies aimed at tackling climate change" according to the IPPR (the Institute for Public Policy Research).
The Carbon Price Support scheme, which is due to begin in 2013, is another plank of the UK Government's strategy to tackle climate change.
But the scheme will force up to 60,000 more UK households into fuel poverty as energy companies pass on the additional costs of paying the tax to consumers, the IPPR's analysis of the Government's own figures shows.
By introducing a floor price for carbon in only one of the European Union's ETS’s participating countries, IPPR says this will undermine the economic efficiency of the scheme.
“Because a floor price for carbon in the UK will depress the carbon price elsewhere in Europe, the UK will effectively hand over billions to European polluters," said Andrew Pendleton, its Associate Director.