Ahead of a HM Treasury consultation on carbon price support, that is anticipated in the coming weeks, EEF has set out its position.
The expected consultation will set out how government intends to reform the Climate Change Levy and possibly introduce a carbon price support mechanism that sits on top of the EU Emissions Trading Scheme cost of carbon, in order to provide a long term price signal to low carbon investors. This mechanism will affect all purchasers of electricity, through the pass through of costs by the generators subject to the mechanism.
Media release – 19 November 2010:
Ahead of a series of major announcements expected on carbon pricing and energy market reform, manufacturers have challenged the government to act in the best interests of both consumers and investors by consolidating the growing tangle of schemes that put a price on carbon emissions.
Manufacturers were dismayed last month when the government turned the CRC Efficiency Scheme into a £1 billion tax without any warning or consultation of affected parties. In an instant the policy moved from a being a revenue neutral scheme that rewarded investments in energy efficiency to become yet another tax on energy.
Rationalising the confusing tangle of policies that set different carbon prices for different parts of the economy is essential. Not only will it give would-be investors in the low-carbon economy greater clarity; it will also go some way to helping restore the trust of the thousands of companies on the sharp end of the CRC decision.
There is ample scope to consolidate overlapping schemes like the CRC, the Climate Change Levy and the planned Carbon Price Support Mechanism into a more coherent and effective climate policy.
Commenting, EEF’s Head of Climate and Environment, Gareth Stace, said:
“We are fast reaching a tipping point. The government has a choice to make between creating further confusion or opting for consolidation that will unleash the potential of the low-carbon economy as well as easing the burden on business.
“If we keep adding to the hotchpotch of existing schemes, we will only muddy the waters for investors and make life unnecessarily difficult for the companies shouldering the burden of climate policy.
“The smart option is to take a more strategic approach based creating a transparent, consistent and predictable carbon price. Consolidation is a win-win approach to climate policy – it will encourage more investment in low-carbon technologies and reduce the cost for compliance for hard-pressed businesses.”