Energy intensive businesses must be exempt from paying a carbon tax. These were the words of the Confederation of British Industry’s Chairman yesterday.
Addressing the CBI energy conference Director-General John Cridland told an audience of business leaders, politicians and energy suppliers: “At a time when re-balancing of the economy needs UK manufacturing to be playing a bigger role, energy-intensive industrial users need more help. But the budget unilaterally increased their cost base.”
The CBI boss warned that the government’s policy decisions were in fact counter productive: “We’re already seeing warnings from companies like Ineos that its chlorine plant in Runcorn could become uneconomical under the sudden introduction of the proposed carbon floor price. Tata steel is facing the same problem. One major construction company is now finding it will soon cost less to import its cement from Spain than to produce it at its UK plant.
“Yet Tata makes the steel that goes into the turbines. Ineos makes the lubrication that helps the blades turn. And we need up to 150 tonnes of cement to generate every megawatt of offshore wind.”
In its March budget the Treasury announced the introduction of a minimum price for carbon of £16 per tonne from April 1, 2013, which will rise to £30 per tonne by 2020.
According to analysis from Point Carbon, businesses could face a carbon floor price of up to £47 a tonne by 2020, which compares to a current EU carbon allowances price of around £15.
Mr Cridland outlined what he thought British business needed:
-scrapping of the CRC scheme.
-Introduction of a higher ‘trigger price’ for natural gas in place of the North Sea oil and gas levy.
-On the carbon floor price: CBI propose a rebate-based exemption linked to the energy intensive industries’ work on energy efficiency.