Chemical sites hit by `illogical’ policy on energy tax breaks

Up to a fifth of chemical sites could be excluded from the 80% cut in the climate change levy proposed by the Department of Transport, Environment and the Regions.

The DETR, which is trading levy reductions against energy efficiency improvements, is to exclude chemical sites not covered by Integrated Pollution Prevention and Control (IPPC) regulations from the deal.

The Chemical Industries Association said it was `very unhappy’ with the decision.

IPPC-regulated sites manufacture or handle the most dangerous chemicals. Judith Hackitt, CIA director of business and environment, described the decision to exclude non-IPPC regulated sites as `illogical’.

`Some industrial gases sites are very energy intensive but are not included under IPPC. This is an illogical division,’ she said.

The 10 industrial sectors covered by the DETR agreement – aluminium, cement, ceramics, chemicals, food and drink, foundries, glass, non-ferrous metals, paper and steel – will pledge to reduce carbon dioxide emissions by a total of 2.5 million tonnes per year by 2010.

These sectors account for over half of the energy used by manufacturing industry in the UK. Less intensive energy-using sectors are expected to reach indicative energy efficiency agreements with the government by the end of February.

The climate change levy package aims to reduce emissions by at least 4 million tonnes a year by 2010.

Although the details of the agreement have not been hammered out, the energy efficiency gains sought by the government are higher than those agreed voluntarily with the CIA in 1997. The CIA then pledged to improve energy efficiency – the ratio of energy consumption to output – by 20% between 1990-2005.

Improving the energy efficiency of industrial processes and emissions trading are the two main methods for sectors to meet their agreed targets.

The government’s draft climate change programme is expected to be published in full early this year.