The Committee published this latest inquiry “ Reducing carbon emissions from UK business: The role of the Climate Change Levy and Agreements ” at the end of August, with a four week deadline for written submissions. One of the main aims of the inquiry was to understand better how the current climate change policy mix does overlap and create confusion for businesses and how well both the levy and agreements were delivering real environmental benefit.
EEF's response
In our response, we stated that the government has failed so far to take on board the recommendation of the Stern Report in calling for the greater use of environmental taxes alongside trading and regulation and is currently advocating the use of trading, rather than exploring other options. There sometimes appears to be an assumption that emissions trading is the favoured instrument.
We also highlighted that, in relation to costs associated with Climate Change Levy (CCL) and CCAs, the UK steel industry operates in a highly competitive global market in which overseas capacity, quality and penetration of the UK market are all increasing rapidly. Therefore any unilateral increase in costs will result in carbon leakage to global markets not subjected to any carbon constraint. This can actually result in an increase in global carbon emissions.
EEF called on the government to consider improving incentives for energy efficiency in other business sectors by extending the right to participate in CCAs to any sector that can demonstrate a credible plan to deliver efficiency gains.
In parallel, looking further ahead to the end of the current CCAs, EEF supports an option to scrap CCAs for sectors that are subject to EU ETS. However, this would only work if CCL is not applied to those sectors, so that installations continue to receive the CCL 80% discount.
Oral evidence sessions will take place later in October 2007.