Scrap ineffective green taxes, says EEF

EFF estimates that the Carbon Floor Price – which was introduced by the coalition government in 2013 as a means of encouraging the manufacturing sector to move away from using fossil fuels - will actually cost energy consumers £23 billion by 2020, while the CRC scheme - which was introduced in 2010 - will likely cost businesses around £900 million by next year.

“The current system of energy taxation is too complex and is hurting Britain’s competitiveness,” said Paul Raynes, EEF director of policy.

The current system of energy taxation is too complex and is hurting Britain’s competitiveness

EEF’s Paul Raynes

The government should be offering “carrots and incentives” to install energy saving equipment, invest in unexplored low-carbon technologies ahead of the curve, and become leaders in the low-carbon markets, the Low Carbon Economy – From Stick to Carrot report suggests.

The report also urges the government to use its carbon taxes review, announced by Chancellor George Osborne during his last Budget statement, to approach climate change and energy policy in radical new ways, reducing red tape, while delivering “major reductions” in industrial emissions.

“Government should use the energy taxation review as an opportunity to step back, and make some bold decisions that we believe can reduce energy costs as well as cutting back on carbon emissions, and improving the environment,” Raynes said.

As part of its report, EEF has suggested the government introduces an incentive scheme that it says could deliver ten times as much new green investment as the Carbon Floor Price and the CRC scheme.

“Greening heavy industry can’t happen without rolling out radical new technologies that are still far from fully developed, or financially viable, and doing that quickly,” Raynes said.

“If we can’t put roller skates under the new green technologies, existing tax policies will undermine these fundamental British industries to no environmental gain in the long run,” he added.

EEF’s report comes ahead of climate change talks that will be held in Paris later this year.

During July, 24 representatives from the UK’s engineering sectors issued a ‘Climate Communique’ which calls for a strong climate change deal to be struck in Paris, while also calling for urgent action to curb greenhouse gas emissions.

Rachael Hall, a member of the IChemE Energy Centre board, said: “The time for talking without substantial action has passed. In Paris, governments must do everything possible to secure a universal, binding agreement that will limit global warming in this century to 2°C.

“An effective agreement in Paris will, amongst other things, foster the widespread adoption of climate-change mitigation technologies that are already available and ready to be deployed.”