The UK Steel Association has written to Chancellor Gordon Brown urging him to exempt steel and other energy-intensive industries from any energy taxes he may introduce in his March Budget.
It has been widely mooted that the Government may impose energy or CO2 taxes on industry to help meet the UK’s commitments under the Kyoto agreement. The UK is legally bound under Kyoto to cut greenhouse gases by 12.5% below 1990 levels by 2008 2012. The Government has also set its own target of cutting CO2 emissions by 20% by 2010.
UK Steel claims taxes on the steel industry, which has already halved its CO2 emissions, would not deliver the targeted environmental improvements. Taxes would also ‘undermine UK competitiveness, reducing industry’s ability to invest in new process routes that promise further environmental gains’, said the trade association.
It said several EU countries have already recognised this and exempted some of their energy-intensive industries from Kyoto-based energy taxes.
UK Steel is proposing two new measures in place of taxes: negotiated agreements, whereby industries commit to real reductions, backed by legal penalties for non-compliance; and bonds to help finance investment in environmental improvements.
The ‘environment bonds’ would be issued to the public with tax advantages attached and would be restricted to financing spending on environmental improvements.
These measures, UK Steel claimed, would help further environmental best practice without eroding UK competitiveness.
* Scottish Engineering, the leading trade body for the sector in Scotland, has also laid out its Budget stall to the Chancellor.
Its main pleas are: a change to give 100% capital allowances for small and medium-sized technology and engineering firms; a tax credit open to all firms based on incremental spending on R&D; provision of a rebate for NI contributions to support training and the creation of an applied technology scheme to enhance shared expertise among firms; and a project finance guarantee for small companies.