Energy-intensive manufacturers of products such as steel, glass and paper will see their costs soar as the carbon price floor rises from £16 per tonne of CO2 today to £30/tonne by 2020.
Jeremy Nicholson, director of the Energy Intensive Users Group, said firms had “very great concerns” about the tax. “It threatens the competitiveness of UK manufacturing compared to the rest of Europe – and Europe is the only part of the world that already subjects its companies to a carbon trading scheme,” he said.
Chancellor George Osborne said firms would be shielded from price rises by a wider discount to the Climate Change Levy, another tax on energy use. But the TaxPayers Alliance (TPA) said the change was “deeply misleading” as the discount was decreased in 2009’s Pre-Budget Report and Osborne had simply returned to that level. “Those industries have only had their original position….restored and this does not mitigate the substantial increase in costs resulting from the carbon price floor,” said TPA director Matthew Sinclair.