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New CO2 laws may cost industry dear.

Byline: Peter McCusker

CBI boss John Cridland has slammed the plethora of carbon taxes being imposed on North East business saying the pendulum has swung from reducing CO2 emissions to raising revenues.

In the last Budget the Government announced the launch of a Carbon Price Floor, this comes on top the EU Emissions Trading Scheme and the Carbon Reduction Commitment scheme.

Energy intensive industries in the North East are already feeling the pressure with the head of the region's process industry umbrella group saying the new legislation could cost the North East thousands of jobs.

The Rio Tinto Alcan Lynemouth aluminium plant fears the changes to legislation will wipe out its annual pounds 40m profits.

This is said to be one of the reasons for Rio Tinto launching a strategic review of the operation of the plant, which could lead to its sale.

Addressing his first CBI energy conference as director-general of the UK's largest business group, Cridland told an audience of business leaders, politicians and energy suppliers: "In the past, we tried to weigh up attempts to reduce carbon emissions together with the needs of industrial users.

"Today, this seesaw has become a three-way balancing act, with the new third element being the Government's need for revenues.

"Over the last year the Government has triple-dipped into the industry till because of the need to raise revenue, with the Carbon Reduction Commitment, Carbon Floor Price and the recent hike in oil and gas tax.

"At a time when re-balancing of the economy needs UK manufacturing to be playing a bigger role, energy-intensive industrial users need more help. But the Budget unilaterally increased their cost base."

Cridland said that investment decisions would be affected by the policies: "We're already seeing warnings from companies like Ineos that its chlorine plant in Runcorn could become uneconomical under the sudden introduction of the proposed Carbon Floor Price. Tata Steel is facing the same problem.

Energy Minister Chris Huhne's Carbon Budget last month pledged the UK would halve CO2 emissions by 2025, well ahead of the rest of the Europe.

However, the Government simultaneously launched a review - which is expected to produce recommendations by the end of the year - on how it can support energy intensive industries.

John McCabe, corporate affairs director at Rio Tinto Alcan, said: "The Government has said it will look at a package of measures to support business like ours, but these will have to be meaningful and significant."
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Title Annotation:Business
Publication:The Journal (Newcastle, England)
Date:Jun 15, 2011
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