When Britain signed up to some of the world’s toughest carbon-reduction targets earlier in the year there was a major get-out clause.
It was announced that the targets would be reviewed in 2014 to make sure the EU was moving in line with the UK. If Europe was not hitting its targets Britain would be allowed to miss its own. This was described then as the “rip-chord” to make sure Britain remained competitive.
George Osborne took the credit for the decision – during his conference speech – prompting some commentators to think this was a new policy.
Now Mr Osborne is once again seeking to ensure that his name is attached to a separate government initiative to alleviate the impact of a major green policy. In next month’s growth review (or ‘mini-Budget’) he will announce measures to help the energy-intensive users, such as steel companies and chemicals firms, hit by the proposed carbon floor price. (This doesn’t come into effect from 2013 and will start at a relatively low level.)
It is truly a sign of the times when a cabinet minister is seeking to take “credit” for helping to neuter* a green policy – given how much importance the Tories placed on such issues only a few years ago.
In reality, however, the measures to help the steel and chemicals industries have been discussed for months. In fact it was Lib Dem energy secretary Chris Huhne who promised in May to introduce a “package of measures for energy intensive businesses whose international competitiveness is most affected by the end of the year.”
These industries were “critical to our growth agenda” and would therefore be helped to send out a message that the “UK is open for business”, Huhne told the Commons.
Ministers from both parties are alive to warnings from manufacturers about “carbon leakage” – that if steel was not made in the UK it would instead be produced in countries such as India and China with lower environmental standards.
I’m told that ministers and officials have discussed several ways to help these companies, including free allocations of credits in the EU Emissions Trading Scheme or even an exemption from the carbon floor price.
Now, however, the Treasury’s favoured option is a tax rebate which effectively lowers the price of energy for the heaviest users, a system which already exists in Germany. A source close to Osborne has told the Daily Mail he recognises the damage done by “a decade of environmental laws and regulations“.
David Cameron, meanwhile, has been conspicuous by his silence – not even mentioning green issues in his conference speech.
* Let’s wait to see how many companies will be helped by the measures. I’m told it will only be eight big manufacturing sites in three industries; aluminium, chloride-alkaline and electric arc furnace steel
Jim Pickard
Kiran Stacey