Planned UK energy tax under fire again

Industry groups predict heavy damage to manufacturing companies, call for changes

The UK's planned industrial energy tax will harm manufacturing competitiveness while doing less than it could to reduce carbon dioxide (CO2) emissions, leading industry groups claimed on Friday. The move reflects continuing industrial unease over the UK£1bn (euros 1.56m) climate change levy as its 1 April introduction nears.

A key element of the tax will be 80% rebates for energy intensive sectors that sign voluntary agreements with the government to improve energy efficiency and cut greenhouse gas emissions. Fifty-three sectoral associations are currently in talks, the UK environment ministry told ENDS Daily.

However, according to the national Engineering Employers Federation (EEF), research carried out with consultancy Ernst and Young shows that there are some 2,300 firms with annual energy bills over UK£100,000 that will be "excluded" from agreements. These firms will face net new costs of UK£100m even after factoring in cuts in employers' social security charges that are to be funded from the levy, the group said.

Backed by the Confederation of British Industry (CBI), the EEF wants more firms to be eligible to strike energy efficiency agreements with the government. It estimates that if only half the 2,300 firms identified participated then industrial carbon emissions could be cut by 0.5m tonnes (equivalent to 1.5m tonnes of CO2). This would add up to a quarter to the government's overall expectation for carbon cuts due to the tax of 2m-plus tonnes (ENDS Daily 9 November 1999).

Follow Up:
EEF, tel: +44 20 72 22 77 77; CBI, tel: +44 20 73 95 82 47, and press release.

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