Green tax could drive cement firms out of UK

A leading think tank has warned that cement producers are being driven out of the UK as a result of green tax burdens.

A report in today’s Telegraph says that emissions trading, industry-financed subsidies to the renewable energy sector and the Climate Change Levy are making it harder for UK-based cement producers to compete with rivals in countries that do not have equally exacting environmental regimes.

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

Britain has gone from being a net exporter to a net importer of cement and 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.

Three of the four biggest cement companies in the UK are foreign-owned and Civitas warns it would not take much to persuade them to move production from the UK to overseas.

Cement production is energy intensive. However, although it is excluded from the EU’s taxation of energy products directive, the UK does not exclude it from the Climate Change Levy - albeit at a 35% rate. Cement producers are also paying a large share of the £1.3bn renewable subsidies levy, imposed on business regardless of how energy intensive they are.

The Mineral Products Association has said the UK cement industry is exceeding environmental performance targets agreed with the Environment Agency.

Dr Pal Chana, executive director of the association, said: “Against the backdrop of an investment-constrained economic environment, the industry continues to put environmental control and emissions reductions at the heart of its operations.

“While the country depends on mineral products including cement for its homes, schools, hospitals, roads, railways and much more, the cement industry continues to meet demand through domestic manufacturing; by far the most environmentally responsible way to meet the UK’s needs for this critical product.”