Britain maintains carbon tax freeze until April 2021

LONDON, Nov 23 (Reuters) - Britain's carbon tax will continue to be frozen at 2015 levels of 18 pounds ($22.28) per tonne until April 2021, Chancellor Philip Hammond said on Wednesday, while presenting the government's Autumn Statement.

Britain introduced the tax in April 2013 as a part of its efforts to reduce emissions and meet its climate targets, by making polluting fossil fuel power production more expensive.

There had been speculation prior to the statement that the chancellor could scrap the tax, which think tank the Policy Exchange, said adds around 36 pounds a year, or around 7 percent to household electricity bills.

Most British power producers, such as Drax and SSE (Amsterdam: UW8.AS - news) , support the tax, which they say is needed to help incentivize investment in low-carbon generation such as renewables and biomass.

However, industrial groups have called for the government to abandon the tax, saying it has made electricity prices in Britain uncompetitive.

During the statement Hammond also echoed comments made earlier in the year by prime minister Theresa May, that the government will be taking a close look at the energy market and could intervene when markets are dysfunctional.{nU8N1B4015]

"We will look carefully over the coming months at the functioning of key markets, including the retail energy market, to make sure they are functioning fairly for all consumers," Hammond said.

The government has not given any details about potential interventions, but energy analysts have suggested it could force companies to switch customers to their cheapest tariffs when contracts end.

Energy bills have doubled in Britain over the past decade to around 1,200 pounds ($1,485.48)a year, leading to allegations that utilities were overcharging customers. ($1 = 0.8078 pounds) (By Susanna Twidale, additional reporting by Karolin Schaps; Editing by Alexandra Hudson)