EEF, one of Britain’s leading employers’ groups, has urged the government to scrap the carbon price floor and other green taxes, following on from a series of ministerial moves to slash subsidies on wind and solar schemes.

The demand for more cuts comes as a high profile green crowdfunding scheme, the Trillion Fund, said it would no longer be loaning money to renewable energy projects because the government had “rocked investor confidence”.

EEF said ministers should move away from green taxes that penalise businesses, such as the carbon price floor and the carbon reduction commitment, and instead use tax incentives to reduce CO 2 .

The calls are made in a report titled The Low Carbon Economy – From Stick to Carrot, which forms part of the manufacturing organisation’s response to a review of carbon taxes unveiled by George Osborne in the budget statement.

“The current system of energy taxation is too complex and is hurting Britain’s competitiveness,” said Paul Raynes, director of policy at EEF.

“So instead of simply hitting firms with the big stick of ever-higher carbon taxes and levies, we should be offering them the carrot of tax breaks to invest in advanced low carbon technologies.

“Government should use the energy taxation review as an opportunity to step back, and make some bold decisions that we believe can reduce energy costs as well as cutting back on carbon emissions and improving the environment.”

According to EEF, the UK has a “bewildering” mix of energy efficiency schemes and taxes that have pushed up energy costs and increased red tape without a big enough impact on emissions. This has also made the price of energy for many industries much higher than those faced by European competitors, it claims.



The carbon price floor is a system under which polluters must pay a minimum for the right to emit carbon. Affected companies must pay a top up fee if the price of CO 2 falls below a certain level.

The carbon reduction commitment is a system for encouraging certain kinds of companies to become more energy efficient or face financial penalties.

Meanwhile, the Trillion Fund said it was halting new green power funding in a move which will also see the chief executive, Julia Groves, stand down. A letter to lenders from Groves and her successor, Theresa Burton, said the decision followed government policy changes.

“UK renewable energy projects have been our primary focus to date, but recent changes in government policy have rocked investor confidence and made the landscape for future renewable energy projects very uncertain.



“As a result we have decided that, with regret, we will not be able to offer any new renewable energy loans for the foreseeable future.



“In these uncertain times, the company will instead focus on offering technology and crowdfunding services to other businesses across all sectors.”

Last week Lord Bourne, the energy and climate change minister, dealt the latest blow to green energy schemes when he refused to allow planning consent to an offshore windfarm off Dorset. Subsidies to onshore wind have already been scrapped.