Green tax drives cement makers abroad

Published:  02 November, 2010

LONDON: Environmental taxes threatening to force Britain's cement producers abroad, a leading think tank has warned.

Emissions trading, industry-financed subsidies to the renewable energy sector and the Climate Change Levy make it harder for UK-based cement producers to compete with rivals in countries that do not have equally exacting environmental regimes, said Civitas.

Companies are increasingly sourcing their cement from countries such as Turkey, Civitas claims, where lower environmental standards make it cheaper to produce. Shipping costs are relatively cheap compared to the energy required to produce cement.

Britain has already gone from being a net exporter to a net importer of cement. Civitas fears that similar oversight of the effect regulations and taxes can have on competitiveness will undermine other manufacturing industries with potentially damaging consequences for the economy.

David Merlin-Jones, research fellow at Civitas, said: "For the UK, the crucial issue is the extra costs Britain imposes on its manufacturers that other EU countries do not. Each of these may be small in themselves, but in total they are undermining British competitiveness.

"In the case of the cement industry, three of the four biggest companies are foreign-owned so it won't take much more to push them away from British production."

Cement is an energy intensive industry. As a result, it is excluded from the EU's taxation of energy products directive, but the UK does not exclude it from the Climate Change Levy, charged at a 35% rate. Cement producers also pay a large share of the £1.3bn renewable subsidies levy, imposed on business regardless of how energy intensive they are.

The Mineral Products Association fears that the next phase of Europe's emissions trading scheme in 2012 will be so expensive it will make cement production in the UK "impossible".

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