H.M. TREASURY NEWS RELEASE

HM Treasury News Release

126/99

27 July 1999

CLIMATE CHANGE LEVY MEETING - JOINT MINISTERIAL STATEMENT

Patricia Hewitt, Economic Secretary to the Treasury, Environment Minister, Michael Meacher and Trade & Industry Minister, John Battle, met representatives of the energy intensive sectors to discuss the Climate Change Levy at the Treasury today.

Commenting afterwards, Patricia Hewitt said:

"My ministerial colleagues and I were delighted to meet representatives of the high intensive energy users today to discuss the climate change levy.

"We had very useful discussions about the levy. Today's meeting formed another important milestone in the ongoing process of consultation and dialogue over how we can practically implement the levy.

"We want to work with industry and other interested parties to ensure we design the climate change levy in a way that maximizes its environmental effectiveness whilst safeguarding competitiveness."

Following the meeting, the Economic Secretary announced a new proposal which would exclude electricity used in chemical reactions from the levy, in addition to coal and gas.

The decision was formally announced in response to a Parliamentary Question from Ivor Caplin MP.

Patricia Hewitt said:

"As indicated in the consultation document published by Customs and Excise on Budget day coal and gas used in chemical reactions will not be subject to the levy.

"Officials at Customs are having useful discussions with industry about how to apply the exemption to fuels used both for chemical reaction and for heating, such as in the steel industry.

"In the light of the representations received on the treatment of electrolysis, we propose to extend this to electricity. We propose that electricity used for electrolysis, either for the production of chloralkalis or the primary smelting of aluminium, will be exempt from the levy to the extent that it is used in chemical reactions.

"Again, Customs will discuss precisely how this will work with the industries involved with a view to the revised treatment being included in the draft clauses to be published in the Autumn."