Britain's eco-tax exemptions pass EU state aid test
Date: 29-Mar-01
Country: EU
Britain's so-called climate change levy which comes into force in April is a tax on the industrial consumption of energy. The policy is aimed at improving energy efficiency and reducing the "greenhouse gases" blamed for global warming, but some sectors will be exempt or enjoy a reduced rate.
As tax breaks can sometimes constitute state aid - which is strictly controlled under EU single market rules, Britain notified the details of its plans to the Commission which yesterday said all but one tax breaks were acceptable.
Exemptions for fuels used in public transport and rail freight, for combined heat and power generation and renewable energies were all given the EU nod of approval.
Reduced eco-tax rates for industry sectors signing up to voluntary programmes to improve energy efficiency were also acceptable, the Commission said.
The chemicals, aluminium, food and drink, paper, glass, ceramics, cement and steel industries had already agreed such measures, the Commission said.
But the Commission said the case of certain industrial processes in the chemicals and metals sectors where part of the fuel is used for non-fuel purposes would be investigated further to see if it constituted unfair state aid.
The climate change levy is expected to raise one billion pounds ($1.43 billion) in its first full year and is supposed to reduce carbon emissions by five million tonnes a year by 2010, the Commission said.