UK energy shake up: Why scrapping the carbon tax and decoupling gas from power prices matters less than the quiet shift to renewables

The UK government scrapped the Carbon Price Support and proposed measures to decouple gas from electricity prices, but the real energy transition is happening through investment and grid upgrades, not policy headlines. Gravis Capital Management argues that removing the CPS will barely affect bills because the UK Emissions Trading Scheme absorbs most of the cost, and the total carbon price must still fund net zero. The move does align the UK more closely with the EU ahead of the 2027 Carbon Border Adjustment Mechanism, with the UK carbon price rising to about 65 pounds per tonne and the gap to Europe narrowing to around 9 pounds. Meanwhile, the proposed decoupling of gas from power prices remains vague. The Electricity Generator Levy only bites above roughly 82 pounds per megawatt hour, a level rarely reached outside a crisis. The more significant lever, wholesale Contracts for Difference for legacy low-carbon generators, has no strike prices or auction details yet. Retrospective policy changes have already spooked capital, as seen when the government switched subsidy indexation from RPI to CPI without warning. The real decoupling is happening through investment, grid upgrades, and diversified supply. Gas now sets the power price about 60% of the time, down from 90% in the early 2020s, and could fall to 15% as renewables and nuclear connect. The AR7 auction locked in a record 14.6GW of new low-carbon capacity. The system is cleaning itself up through investment and grid upgrades, not policy headlines.