Skip to main content

New UK carbon tax - not green and threatens jobs





A MULTI-MILLION pound sweetener to soften the blow of new measures to cut carbon dioxide emissions will do nothing to alleviate concerns of further carbon leakage, say leading industry figures.

The Carbon Floor Price (CFP), which came into effect last week, will net the UK Government over £4 billion in tax revenues over the next few years.

Its introduction was announced in the Budget of 2011 and contributed to closure the Lynemouth aluminium smelter with the loss of 600 jobs.  Alcan said the CFP levy would wipe out the Northumberland plant’s annual £40m profit.

In an effort to guard against further cases of carbon leakage the Government last month set up a £250m compensation fund to support energy-intensive businesses, but this hardly bears comparison to the £7bn the German Government is offering business to compensate for its renewable energy surcharges.

Members of the London-based Energy Intensive Users Group (EIUG) are businesses where energy can account for up to 70% of production costs, such as those in the steel, paper, cement, lime, aluminium and chemical industries. 

Director Jeremy Nicholson said: “The compensation measures are a step in the right direction but they have not leveled the playing field.”

The CFP will see larger carbon emitters charged £16 for every tonne of carbon dioxide they emit, rising to £30 per tonne by 2020, and £70 per tonne in 2030.

The European carbon price is currently languishing well below £3 per tonne, compared to a £30 high in 2008, meaning UK businesses have to pay over £13 more to emit carbon than EU competitors.

Andrew Hebden, assistant director of CBI North East, said it welcomes the measures to support energy-intensive industries, adding:  “This is all the more important to counter the increasing difference in carbon price between the UK and the EU.” 

Fertliser manufacturer Growhow, which employs 200 people in Billingham, is a member of the EIUG.

Deborah Pritchard-Jones, public affairs director at Growhow, said:  “The compensation package as it currently stands will only last until 2015 and we're not sure what the level of support there will be after that.

“The Carbon Floor Price will impact on our business, the compensation is short term and consequently we have no certainty on the future costs. Long term investment decisions require certainty.” 

The Government estimates the CFP will cost energy-intensive business £130,000 a year in 2013, rising to £1.1m in 2020. But for some larger North East businesses this could be much more.
At the time of the CFP announcement in 2011 Tata Steel on Teesside and a further 20 of Teesside’s chemical and process companies expressed concerns, saying the cost implications could deter long term investment and cost jobs.

A spokesman for Sahaviriya Steel Industries, who have since bought the Teesside plant, said: “At this stage we are not certain of how the compensation scheme will work, but further increases in input prices are detrimental, and create uncertainty over potential future investment.”

Nicholson says the CFP and further measures in the Energy Bill may lead to doubling of energy costs over the next decade.

Michael Dent a director at South Shields–based energy experts Utilitywise highlights how this UK-specific tax will harm indigenous businesses.

“It’s generally accepted that there is a real need to increase the cost of carbon throughout Europe but to maintain a level-playing field for UK industry, policy should be set at a European level.” 

As things stand UK business is at a long-term disadvantage to European competitors, and the continent is at a disadvantage to the US, where shale gas has halved energy costs.

Corin Taylor, senior economic adviser to the Institute of Directors, recently spoke to members of Teesside’s process industry at a shale gas event organised by Teesside University Business School.

He highlighted how the CFP does nothing to reduce carbon emissions and added: “With US energy costs falling the UK and Europe are not looking as attractive and there is a real risk the trickle of businesses leaving the UK could become a flood.”

ENDS


Comments

Post a Comment

Popular posts from this blog

Zero-Energy Poverty Will ‘Trump’ Net Zero

THE progressive pathologies of the 21st Century are collapsing around us so  could the most economically damaging of the lot be next?  Mass, low-skilled immigration is now acknowledged as a drain on a host nation’s economy, detrimental to social cohesion, and a fuel for criminality. Meta boss Mark Zuckerberg has binned arch-liberal Nick Clegg for a Trump supporter Joel Kaplan;  prostrating at incoming President Trump’s feet, he acknowledged his culpability in censoring free speech. America’s leading banks are withdrawing from the Net Zero Banking Alliance which has curtailed investment in hydrocarbons in favour of unreliable renewables. And, now Trump’s incoming energy secretary Chris Wright, is set to axe the damaging Net Zero fallacy in favour of a global focus on Zero Energy Poverty. Wright, Founder and CEO of US gas fracking firm Liberty Energy, says Net Zero is a threat to the prosperity of mankind. Net Zero Lies Where Wright and Trump’s Net Zero scepticism is s...
Post a Comment
Read more

The Un-economic Reality of So-Called ‘Green’ Energy

  Acme inc recently appointed a new chief executive, and he got off to a flying start. With the wind in his sails he ripped it up with some a stunning opening results, but the dynamic subsequently shifted. And, now It seems that he can only work around 25% of the time (1). On joining he brought in his own team of administrators and executives at an additional onerous financial cost to the business and while they continue to beaver away they are non-productive overheads. (2)  Well, surely you’ll be firing him shortly if he can only work 25% of the time. What’s his problem? Well, occasionally on the days when he doesn’t want to work we can reach him on what’s app or the phone and he’s able to deliver some stunning insights, (3) but that’s rare as we don’t know where he is most of the time. What’s the board going to do about this? Well as we have a lot of Government cash to support the business (4), and his appointment was the result of pressure from many virtue-signalling direct...
Post a Comment
Read more

Trump’s Net Zero Pushback Will Expose UK’s Energy Lunacy

TRUMP’S new energy chief will lead America into an era of energy dominance - as the UK heads into an era of energy insecurity. Chris Wright, the founder and chief executive of Denver-based fracking firm Liberty Energy, contends hydrocarbons have boosted human flourishing and   taken millions out of poverty. Once in office he’ll encounter our own Energy Minister Ed Miliband, who studied PPE at Oxford, and has a penchant for bacon sarnies and pasties. While they’re both playing on the same pitch their ethos and tactics could not be more different - akin to a Pep team taking on Graham Taylor’s Watford - abundance versus scarcity.   In his first stint as Energy and Climate Change Secretary Miliband enacted one of the most-damaging pieces of UK legislation of modern times; the 2008 Climate Change Act. This made the UK the first country in the world to put climate targets into law with the aim of neutralising greenhouse gas emissions by 2050. Technically, and financially, impossible...
Post a Comment
Read more