Jim Ratcliffe backs Tory pledge to slash net zero tax
Sir Jim Ratcliffe has joined a number of manufacturing bosses in support of a Tory pledge to axe carbon taxes levied through a trading scheme critical to the government’s net zero efforts.
In a joint release between the Conservatives plus the Ineos chief and other industry bosses, the Kemi Badenoch’s party said it would save UK refineries and other businesses millions of pounds each by scrapping the UK Emissions Trading Scheme (ETS).
The tax regime, which is levied through the emissions trading scheme and which makes high-carbon energy more expensive than renewables, has been the scorn of industrial businesses across the country.
A number of manufacturing sectors have hit out at the government over the trading scheme, with cement businesses complaining that it “eroded” industry across the country.
But the latest tax cut pledge from the Tories will likely spark debates about funding commitments. Labour officials argued that the government was set to post an income of around £3bn from the scheme in 2030, the key year for the size of the fiscal headroom.
Ratcliffe previoulsy said the ETS was “killing manufacturing” and leading companies to pause investment in key projects.
The previous Conservative government introduced the scheme after Brexit as part of a net zero drive. The petrochemicals tycoon complained last year that businesses could not “afford” to pay the tax.
It is based on a similar model implemented across the European Union. Firms trade emission allowances at auctions, with a cap set on the total amount of carbon emitted throughout industry being reduced over time.
Refineries have stumped up millions of pounds a year on the tax, with ExxonMobil’s petrochemical complex in Fawley, which is near Portsmouth, stating its bill on paying for carbon emissions reaches up to £80m a year.
Scrapping the ETS is estimated to cost around £3.1bn by 2030. It is also seen as critical to the Labour government’s “Brexit reset” deal with the EU as the UK’s independent trading scheme is set to be joined up with the economic bloc.
The Tories have said that the lost tax income from the scheme will be covered by broader cuts to energy subsidies while the party has also pledged to scrap the government’s EU deal.
Ratcliffe ‘welcomes’ vow to slash net zero costs
Badenoch said: “It’s time to reverse decades of deindustrialisation, by doing what Keir Starmer lacks the backbone to do: axe the carbon tax in its entirety.”
Ratcliffe welcomed the Tories’ pledge.
He argued the government should prioritise energy independence and competitiveness over green energy projects to “keep lights on” and improve “industrial strength”.
The petrochemicals billionaire added: “All of this points to one obvious conclusion: we should be exploiting our domestic reserves of oil and gas. Not doing so, while importing energy from abroad, is economic and strategic lunacy.”
Paul Greenwood, who the UK chair of ExxonMobil, said another trading system was needed to account for the “carbon emitted as these products are created, not just in the UK but wherever in the world that happens”.
Robert Flello, chief executive of Ceramics UK, said: “The ceramics industry cannot afford to keep paying a carbon tax that our competitors simply don’t face. Scrapping it would be a huge relief for the industry and halt the deindustrialisation of Britain.”
Industry minister Chris McDonald said the pledge was a “total embarrassment” given Badenoch had contributed towards introducing the measures as a government minister.
“This multi-billion-pound unfunded spending commitment has echoes of Liz Truss and would leave working people picking up the bill,” McDonald said.
“The failed Conservative Party hasn’t changed, and their sums still don’t add up.”