© Environment News Service (ENS) 1999
December 23, 1999
LONDON, UK, December 23, 1999 (ENS) - The UK's ten most energy intensive industrial sectors have agreed to emit 2.5 million tons less carbon dioxide (CO2) annually by 2010 in return for rebates on a forthcoming energy tax, the UK environment ministry said Tuesday. The ten sectors account for over half the energy used by UK manufacturers.
Companies will be able to use a planned national emissions trading scheme to help meet their targets. Heat trapping emissions of carbon dioxide produced by burning oil, gas and coal are blamed for global warming.
This new agreement with industry on energy efficiency will bring to at least four million tons the total annual emissions reduction from the tax package, ministry officials said.
Due to start generating revenues from April 2001, the climate change energy tax was announced in March this year. It was recently fine tuned after a consultation process with industries, which had argued for a 90 percent rebate for the most energy intensive sectors.
The levy will be charged on all businesses at UK£0.15 (euros 0.24) (US$.24) per kilowatt-hour (kWh) for gas and coal, and UK£0.43 per kWh (US$.69) for electricity.
Revenues will fund a 0.3 percent reduction in business employment taxes and will support renewable energy projects.
Under Tuesday's accord, companies in areas such as cement making, steel, chemicals and paper will receive an 80 percent rebate on the tax if they adhere to an emission-reduction schedule leading to cuts of around 2.5 million tons of CO2 within a decade.
Agreements with other eligible sectors are expected to be concluded in February. Eligibility is based on classification as energy intensive under the UK's national legislation implementing the 1996 European Union integrated pollution prevention and control directive.
Companies will continue to be eligible for the rebate if they pass twice yearly checks that they are meeting interim goals towards the main target. The government says the level of stringency is comparable between sectors.
Along with the changes announced in November, the rebate represents a big shift towards meeting industry concerns that the levy would harm the competitiveness of energy intensive firms.
Industries such as chlorine manufacture using electricity as a "feedstock" in electrolytic processes will be exempt from the tax, as will energy products which serve a dual purpose as a fuel and as a feedstock within the same process.