Session 2010-11
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General Committee Debates
Delegated Legislation Committee Debates

Draft Climate Change Levy (Fuel Use
and Recycling Processes) (Amendment) Regulations 2011

The Committee consisted of the following Members:

Chair: Mr Roger Gale 

Anderson, Mr David (Blaydon) (Lab) 

Burden, Richard (Birmingham, Northfield) (Lab) 

Carmichael, Neil (Stroud) (Con) 

Clwyd, Ann (Cynon Valley) (Lab) 

Donaldson, Mr Jeffrey M. (Lagan Valley) (DUP) 

Gardiner, Barry (Brent North) (Lab) 

Goodwill, Mr Robert (Scarborough and Whitby) (Con) 

Greening, Justine (Economic Secretary to the Treasury)  

Gummer, Ben (Ipswich) (Con) 

Hands, Greg (Chelsea and Fulham) (Con) 

Hemming, John (Birmingham, Yardley) (LD) 

Hepburn, Mr Stephen (Jarrow) (Lab) 

Hoey, Kate (Vauxhall) (Lab) 

McCarthy, Kerry (Bristol East) (Lab) 

McCartney, Jason (Colne Valley) (Con) 

Poulter, Dr Daniel (Central Suffolk and North Ipswich) (Con) 

Wharton, James (Stockton South) (Con) 

Williams, Stephen (Bristol West) (LD) 

Mark Etherton, Committee Clerk

† attended the Committee

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Second Delegated Legislation Committee 

Monday 28 February 2011  

[Mr Roger Gale in the Chair] 

Draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2011 

4.30 pm 

The Chair:  Good afternoon, ladies and gentlemen. Hon. Members may remove their jackets if they wish to do so. 

The Economic Secretary to the Treasury (Justine Greening):  I beg to move, 

That the Committee has considered the draft Climate Change Levy (Fuel Use and Recycling Processes) (Amendment) Regulations 2011. 

It is a pleasure to serve under your chairmanship, Mr Gale. As the Committee will know, the climate change levy was introduced in 2001. It is a tax on energy delivered to non-domestic energy users in the United Kingdom. Its aim is to provide an incentive to increase energy efficiency and to reduce carbon emissions. It taxes supplies of natural gas, electricity, solid fuel and liquefied petroleum gas. 

A number of exemptions were included, for various policy reasons. One exemption benefited the primary production of aluminium, lead and steel. To avoid the climate change levy having the perverse effect of disadvantaging environmentally friendly recycling processes when competing with the more energy-intensive primary production of those metals, energy used in the recycling process was also exempted from the levy. 

The UK secured a 10-year state aid approval from the European Commission in respect of the recycling processes exemption, which expires on 31 March 2011. The Government have applied to renew the state aid approval for aluminium and steel recycling only, because the case for including lead recycling in the exemption no longer exists. While reviewing the case for continuing the exemption as a whole, my officials consulted the International Lead Association and found that the primary production of lead had ceased in the UK. As there is no longer primary production of lead in the UK, the rationale for exempting lead recycling no longer exists, because there is no longer a competing process. 

The legislation requires that there be a competing primary process for recycling producers to claim the

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exemption, and the International Lead Association has advised my officials that the exemption has not been claimed by lead recyclers for some time. Removing lead from the list of metal recycling processes prescribed for the purposes of paragraph 18A(1) of schedule 6 to the Finance Act 2000 tidies up the legislative position and will ensure that the exemption cannot be inadvertently claimed in future. Doing so from 1 April will also ensure that there is no technical breach of the state aid rules. I hope that the Committee will support this change. 

4.33 pm 

Kerry McCarthy (Bristol East) (Lab):  As always, it is a pleasure to serve under your chairmanship, Mr Gale. I appreciate the explanation that the Economic Secretary has given about why the exemption for lead is no longer relevant. I have just a couple of questions, which she may have come across during the no doubt extensive research that she did in bringing the regulations before us. 

First, I appreciate that if there is no primary lead production in this country, the trade-off in ensuring that there is no disadvantage to people involved in lead recycling does not work. I wondered whether there was still a lead recycling industry in this country and, if so, whether there was an issue about that industry perhaps not being at a disadvantage compared with primary lead production in this country, but being at a disadvantage in now finding it more expensive to carry out its trade. 

My other question is whether exemptions for other metal recycling processes are under consideration that could have been considered when the 10-year exemption for aluminium and steel was being considered. I have no other queries, and we are happy to support the regulations.

4.34 pm 

Justine Greening:  On the first question, we sought the reaction of the lead recycling industry to the exemption. The International Lead Association accepts that there is no longer a case for an exemption. Interestingly, it also told us that no one in the industry has claimed the exemption for some time. Given that there is no primary production, it clearly understands that the case for a recycling exemption is not valid. 

The exemptions for aluminium and steel will continue. We originally had exemptions for aluminium, steel and lead, but as the case for lead has fallen away, we are left with the original two. We do not propose adding other metals. I hope that I have clarified matters. 

Question put and agreed to.  

4.35 pm 

Committee rose.