Warning that carbon tax could result in massive job losses

Mar 11 2010 by William Green, The Journal

A CARBON “tax” could hit the North East’s industrial heartland with companies going bust or moving abroad, a minister has signalled.

Energy Minister Lord Hunt made the apparent admission as he came under pressure over the European Union emissions trading scheme in the Lords.

Northumberland peer Nigel Vinson asked if ministers had assessed the scheme’s impact on carbon dioxide generating industries such as steel, aluminium, glass and cement production.

All of these industries have major bases in the region and Lord Vinson, a former businessman, warned of “massive” job losses if the next phase of the EU scheme goes ahead.

Energy-intensive users have to buy permits to emit carbon dioxide into the atmosphere, and Lord Vinson said firms would effectively face a new tax with those allowances being cut by 20%.

There are fears that could spark “carbon leakage”, where firms move to developing countries that have more relaxed regulations.

Lord Hunt said: “The Government consider that a very limited number of sectors are likely to be at significant risk of carbon leakage as a result of the EU Emissions Trading Scheme.