Risk & Economy » Tax » Energy tax break permissible, rules Brussels

THE GOVERNMENT’S PROPOSAL to provide energy-intensive industries with a tax break to compensate for their higher energy costs have been approved by the European Commission.

The UK’s carbon price floor, which levies £9.55 per tonne of carbon dioxide is designed to reduce companies’ greenhouse gas emissions.

The compensation, Reuters reports, partially offsets the higher electricity costs, “similar to the EU Emission Trading Scheme,” the commission found.

The measure will “further EU energy objectives without unduly distorting competition”, it added.

The plan would see the government reimburse industries such as steel, paper, plastics and chemicals up to 80% of the costs derived from the carbon price floor and the EU ETS.

However, other industries including cement, ceramics and glass miss out on the relief after the commission ruled they are less exposed to higher costs.