Select Committee on Trade and Industry Minutes of Evidence

Letter to Shadow Financial Secretary to the Treasury

  Thank your for your letter of 14 January and my apologies for the delayed acknowledgement. We shall of course be glad to supply you with substantive comment on the impact of the Climate Change Levy. I thought that you might also be interested to read the enclosed article, published recently in the Environment Business Magazine. This article makes the points that:

    —  IPPC is designed to control emissions from the most heavily polluting industries—which are not necessarily the most energy intensive.

    —  IPPC is concerned with pollution, not primarily with levels of energy use.

    —  It does not distinguish those companies most exposed to international competition.

    —  The negotiated agreements have made the system more complicated, not less so.

  To which we might add that the emissions trading scheme is directed at companies producing emissions and not the non-polluting sectors. Whilst the CCL arrangements may be consistent with the recently revised EU guidance on the Environmental State Aid, this is certainly not true in relation to the original guidelines. These made clear that such State Aid must not be used to "conceal the true costs of pollution"—which of course is precisely what the CCL does.

  You may also wish to know that the CBI, Richard Jackson, is currently collating industry views on the Levy prior to a meeting between the CBI Director General, Mr Digby Jones and the Rt Hon Paul Boateng, Financial Secretary to the Treasury, planned for 7 February next.

  The CBI took over a coordinating role on behalf of what were then known as the "Second Wave" industries, ie those industry sectors that did not qualify under the IPPC criteria for admission to the CCL rebate negotiating process.

  And, lastly, may I refer you to comments addressed by PIFA to Mr Simon Jackson at HM Treasury in respect of the Consultation document entitled "Green Technology Challenge" published by HM Treasury in July 2001. A copy is enclosed (not printed).

J R Pugh

Chief Executive

23 January 2002

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