WWF climate change levy report accentuates the positive

“As much money is being returned to business as is being taken away”, according to the report, produced for the WWF by Ecotec Research & Consulting. The report was launched during this year’s Labour party conference and breaks the economy into 81 sectors, using data for 1997.

“The levy is creating incentives for business to economise in their energy consumption and,” the report continues, “by reducing the costs of employing people, is likely to increase the number of people employed.”

Amongst the publications’ other key findings are:

• The economic size of the industries benefiting from the policy, measured by employee numbers of contribution to GDP, is double that of those losing;
• No industry is likely to lose out from the combined effect of the CCL and the cut in national insurance contributions by more than 4% of the values of its sales, even if the CCL is applied at its full rate;
• The industry that loses out most from the package is food production. The loss is 0.15% of the industry’s total turnover;
• UK energy intensive users are losers from CCL, but competitors will be under pressure in other countries also.

The Chemical Industries Association (CIA) welcomed one area of the report in particular. “We are delighted that the WWF has highlighted the service sector as a major area for potential energy efficiency improvements,” said CIA Director General Dr Elliot Finer. The CIA represents one of five sectors of industry that have together put forward a Joint Industry Proposal to the Government as an alternative to the current proposals for the CCL. This proposal extends the concept of sector-specific energy efficiency agreements to all areas of the economy.
“Energy efficiency is much more likely to be improved by having targets, exchanging best practice, and benchmarking than by crude price rises,” said Finer.

Policy recommendations within the report bring attention to, or reiterate, several weaknesses of the levy.

The revenue neutrality of the levy was called into question again. “The package as a whole is of cold comfort to sectors that are significant net losers,” stated the report.

The effectiveness of the tax is another area that the WWF believe would merit attention. “The extra costs of the CCL are a trivial proportion of total spending by many parts of the Service sector.” This echoes the CBI’s belief that SMEs that have low energy costs and high energy inefficiency should be targeted by a specific programme.