SBB 17 October The UK should be more aggressive in its use of tax incentives, on a revenue neutral basis, to encourage investment in energy efficiency and green technologies, says Tim Yeo, Member of Parliament and Chairman of the Energy & Climate Change Committee. However, industries which face international competition, such as steel, should receive some protection, he concedes.
Energy prices in the UK are expected to increase sharply in the coming years, in part because of policies such as the Carbon Floor Price (CFP), which sets a minimum charge for carbon dioxide emissions at power plants. UK steelmakers strongly oppose the CFP, saying that it would make the industry uncompetitive and not lead to investment in low-carbon energy production.
The government is currently assessing how best to compensate industries and those that will receive compensation, notes Ian Rogers of UK Steel. However, the UK Treasury has made it clear there will be no new money for compensation and this will have to be found out of the budget of the Department of Energy and Climate Change, Steel Business Briefing understands.
UK Steel is not opposed to incentivising investment in emissions reduction, Rogers notes. But it does oppose any measure that will “artificially increase costs” relative to other regions, he adds.
Even without government measures, UK industry will face progressively higher energy costs in the future, Yeo notes.