UK chemical industry urges energy tax rebate

"Climate levy" will lead to "flight of jobs and investment" to competing countries, says association

The UK will "lose out economically and socially" without achieving lower carbon dioxide emissions unless chemical firms are given a rebate from a planned new energy tax, the national chemical industry association said yesterday. Announced by the government in March, the "climate change levy" is intended to penalise CO2 emissions while returning revenues to industry through lower social contributions (ENDS Daily 9 March). However, Elliot Finer, director of the Chemical Industries Association (CIA), said that less than 10% of the estimated annual £140m cost of the tax would be returned to the chemical industry due to its energy-intensive nature. The CIA's preferred option, he said, would be to extend its voluntary agreement with the government to improve energy efficiency by 20% by 2005. Energy savings of 14% had been made already in what is the only such agreement in the UK, he said. Dr Finer said that, without a rebate, the burden of taxation would make chlorine manufacture, an energy-intensive process which plays a "pivotal role" in the UK chemicals industry, more expensive than in competing European countries such as Germany, France and the Netherlands. Since elemental chlorine cannot normally be transported by sea, the import trade in products derived from it would be "expected to increasingly replace" downstream processing operations in the UK.

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