Manufacturers call for policy shift ‘from stick to carrot’ on green taxes

The UK Government should move away from out-dated green taxes which target businesses and instead offer green tax incentives to reduce carbon emissions, according to the manufacturers' organisation EEF.

In a new report titled ‘The Low Carbon Economy – From Stick to Carrot’, EEF reviews the carbon tax changes announced by Chancellor George Osborne in this year’s Budget Statement, ahead of the Government’s long-awaited autumn consultation into energy efficiency taxes.

The report calls on the Government to ‘reduce the overall burden’ placed onto businesses through energy taxations and levies and replace the ‘confusing mix’ of regulatory programmes, noticeably the Carbon Reduction Commitment (CRC).


EEF director of policy Paul Raynes said: “The current system of energy taxation is too complex and is hurting Britain’s competitiveness. So instead of simply hitting firms with the big stick of ever-higher carbon taxes and levies, we should be offering them the carrot of tax breaks to invest in advanced low carbon technologies.

“Government should use the energy taxation review as an opportunity to step back, and make some bold decisions that we believe can reduce energy costs as well as cutting back on carbon emissions, and improving the environment.”

Meeting the UN’s goal of keeping average global warming to 2°C will require £0.65tn to be spent on clean energy systems each year by 2030, according to the report. In order to achieve this, EEF is urging the Government to cut costs for energy users, reduce red-tape and deliver major reductions in industrial emissions.

One of the regulatory obligations that the EEF recommends scrapping is the Carbon Floor Price, which currently sits at £18.08 per tonne of CO2 produced. The report estimates that it will cost consumers £23bn by 2020 with just £6.5bn invested back into renewables.

EEF also calls for a reform of the CRC, which currently charges companies around £16 per tonne of CO2 and – despite an estimated cost of £900m to business in 2015/16 – will only deliver £334m over the next decade.


The report comes just days after Business energy consultants Inenco published its own findings on energy users’ attitudes towards current government policies. The ‘Have your say’ survey found that more than two thirds of the 30 major companies questioned want ‘fundamental changes’ to CRC. More than three quarters described current energy reporting as too complex and 70% wanted to see the CRC removed or merged with the Climate Change Levy.

David Cockshott, chief commercial officer at inenco, said: “Business views are both loud and clear: major energy users want the autumn consultation to achieve three aims: consistent reporting, consolidated schemes, and cost transparency. 

“The energy efficiency tax schemes in place are no longer effective and are the result of several government administrations introducing new schemes or amending others, creating an administrative headache for end users. I now hope to see the views from major energy users reflected in the forthcoming consultation.”

Earlier this year, the Energy and Climate Change Committee questioned UK Energy Secretary Amber Rudd on her plans to meet long-term renewables and decarbonisation targets. edie outlined the main talking points here.

Matt Mace

Action inspires action. Stay ahead of the curve with sustainability and energy newsletters from edie