The EEF points to the carbon floor price, the amount companies must pay per tonne of carbon dioxide produced, and the carbon reduction commitment (CRC) scheme as examples of over-complex taxes, which have been less than effective in reducing emissions and raised prices for UK consumers.
The group estimates the carbon price floor will end up costing energy consumers £23bn between 2013 and 2020, but only £6.5bn of this will achieve its intended aim of supporting investment in renewables.
Instead, the EEF call for the introduction of a new energy efficiency tax discount to incentivise investments in greener energy models, bringing it line with the higher levels of investment in the EU.
The report comes in response to George Osborne’s pledge to review energy taxes.
The technologies the EEF is keen to see exploited include carbon capture and storage, using biomass materials in place of fossil fuels, as well as promoting energy efficiency technologies and decarbonising the National Grid, by using low-carbon electric alternatives.
EEF director of policy, Paul Raynes told City A.M. that many companies know they are wasting energy but it is too risky to invest in the technologies to improve energy efficiency, which are not within their area of expertise.
“There’s too big an execution risk for something they don’t know will work,” he said. “We need positive encouragements will help companies take a risk with new technologies, which will make green energy cheaper in the long run.”
According to EEF, there are significant rewards to be reaped: the global market for low-carbon environmental goods and services was already estimated to be worth £3.4 trillion in 2012.