HC Deb 06 July 1999 vol 334 cc456-7W
Mr. Jim Cunningham

To ask the Secretary of State for Trade and Industry if he will make a statement on progress made through negotiated agreements with energy intensive industries as part of the climate change levy to improve energy efficiency; and what measures his Department is taking to safeguard the international competitiveness of manufacturing firms in the United Kingdom [89458]

Mr. Battle

The Department of the Environment, Transport and the Regions (DETR) is leading for the Government on the development of negotiated agreement with a number of energy intensive sectors. We have said that significantly reduced rates of the climate change levy will be available to those energy intensive sectors which enter negotiated agreements with the Government to deliver targets covering energy efficiency improvements and/or cuts in greenhouse gas emissions. The eligible sectors are those covered by the Integrated Pollution Prevention and Control regulations (IPPC). Negotiations are under way between DETR officials, with some assistance from DTI, and the sectors concerned. DETR initiated discussions with an initial group of the nine main energy intensive sectors following the budget, and is also now holding meetings with around twenty further sectors. The negotiations are progressing in a constructive manner. The aim is to have negotiated heads of agreement with proposed targets by the autumn, when the levels of discounts from the levy will be determined, taking account of the stringency of the targets offered.

The Government have previously stated that they aim to avoid taking action on climate change which damages business competitiveness. In this context, I welcome the intention to recycle revenues from the climate change levy, primarily via reduced employers National Insurance Contributions, and also the promised support for promotion of energy efficiency and new and renewable energy technologies, as well as the special arrangements proposed for intensive energy sectors. DTI is contributing to interdepartmental discussions both on the development of the levy proposal and also on the draft national climate change strategy, which is intended for publication later this year for consultation, and which will set the broader policy framework for business's response to climate change.

It is the case that the UK is not alone in having to reduce greenhouse gas emissions or in using economic instruments to do so. Since 1990, seven European countries have introduced carbon or energy taxes. On current projections, most OECDS countries will have to introduce new measures of one form or another to meet their Kyoto targets.