Carbon tax savings to help UK manufacturers
UK INDUSTRY received a £7bn boost yesterday when the chancellor unveiled a package of energy savings for manufacturers, which includes freezing a controversial carbon tax.
Energy intensive industries (EII) argue that the carbon price floor, which taxes fossil fuel emissions, makes firms unable to compete with their rivals in Europe and the US.
Capping the tax at £18 per tonne of carbon dioxide from 2016-17 until 2020 will save a mid-sized manufacturer almost £50,000 on its annual energy bill, and a heavy industrial firm £800,000.
Consumers would also save £15 per year on their bills, the chancellor said, providing a riposte to Labour leader Ed Miliband’s pledge to freeze energy prices if elected.
Other measures include extending an existing compensation scheme for EII until 2020; a new scheme to offset companies’ higher electricity costs from green tariffs; and exempting from the carbon price floor any electricity generated from combined heat and power plants that hundreds of manufacturers use.
Groups including the Confederation of British Industry and manufacturers’ association EEF have welcomed the tax breaks.
But there are concerns that the measures will hinder renewables investment.
“The freeze in the carbon price support level will chill the mood of some investors in clean energy projects,” said Dr Gordon Edge, director of policy at Renewable UK.