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Winning The Debate: MPs Urge Govt To Scrap Carbon Tax

A carbon tax being introduced next year will increase household electricity bills and could have a ‘devastating effect’ on industry, MPs say.

In a damning report they claim the ‘carbon price floor’ will saddle businesses with higher green penalties than the rest of Europe while failing to deliver any environmental benefits.

The Energy and Climate Change Committee urged the Treasury to scrap the plan and warned against revenue-raising exercises ‘disguised as a green policy’.

Chancellor George Osborne announced the levy on businesses for every tonne of carbon they emit last March. Starting at £16, it will almost double to £30 by 2020 for users of coal.

By ‘going it alone’ on setting a minimum levy, the UK faces the prospect of industry relocating to elsewhere in Europe, MPs warned.

Higher carbon costs also mean electricity prices will increase as the UK ends up effectively subsidising other European states, they added.

Committee chairman Tim Yeo said: ‘The Chancellor was right to say we won’t save the planet by putting the UK out of business.

‘Ironically, however, it is the Treasury’s decision to set a Carbon Price Floor that could result in industry and electricity production relocating to other EU countries.

‘Unless the price of carbon is increased at an EU-wide level, taking action on our own will have no overall effect on emissions other than to out-source them.

‘A revenue raising exercise disguised as a green policy won’t help anybody, the price of carbon has to be increased at an EU level to kick-start investment in clean energy.’

Energy generators and heavy industry, such as steel and ceramics, face an ‘exorbitant’ top-up tax of up to £25 per tonne of CO2 under current plans, according to the report.

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