Bidders for Tata Steel’s beleaguered UK business believe the Government is ready to change its much criticised carbon tax to cut energy costs, while Tata is expected to contribute to a clean-up bill of up to £1 billion in the event of closure.
The sweeteners could be critical to lure bidders ahead of a looming deadline for offers for the ailing business, which includes the giant Port Talbot works in South Wales.
Potential buyers must submit bids before a board meeting of the company’s Indian-based parent in Mumbai on Wednesday.
On the same day hundreds of steelworkers are set to march through London to demand the Government ensures a responsible sale of Tata UK and draws up an industrial strategy. More than 15,000 jobs are at risk if Tata’s UK steel operations cannot be kept open.
The Government has been criticised for failing to respond soon enough to the crisis caused by cheap Chinese imports and longstanding, high energy costs, with green taxes cited as a key reason for Tata’s decision to sell its UK division.
The ‘carbon price floor’ introduced by Chancellor George Osborne in 2013 taxes CO2 emissions and makes up more than half the UK power bills for industry. Prices in France and Germany are half those here.
The tax is £18 per tonne of carbon dioxide and is due to rise to £70 per tonne of CO2 by 2030. British carbon emitters pay the tax on top of levies imposed by the European Union’s carbon emissions trading scheme.
One potential Tata UK bidder, which said it had been in regular discussions with the Government, said it was ‘increasingly optimistic’ that the Government was prepared to modify the carbon tax regime ‘because of the competitive disadvantage it causes’.