Carbon tax and energy price hike to create 'perfect storm'

Published on Wednesday 8 December 2010 17:13

BUSINESSES are facing a "perfect storm" from 2012 when they will be hit by a doubling in their energy bills at the same time as the UK government's controversial "carbon tax".

Carbon Masters, a spin-out company from the University of Edinburgh, has calculated that most UK firms will be see their gas and electricity bills soar by 100 per cent between 2012 and 2016 while they will also be saddled with a carbon tax bill of at least 42,000 under the government's Carbon Reduction Commitment (CRC) energy efficiency scheme.

Kevin Houston, chief executive of Carbon Masters, believes most companies are completely unprepared for the enormous jump in their energy costs from 2012 onwards.

The CRC scheme was set out by the previous Labour government in order to encourage large and medium-sized firms which use at least 6,000 megawatts a year to improve their energy efficiency.

The original scheme was designed to be tax neutral with the most energy efficient companies receiving their money back at the end of the year. However, under controversial changes announced by the coalition earlier this year, the funds raised will go to the Treasury, raising 1 billion for the depleted taxpayer's purse.

"People haven't quite woken up to the potential scale of this," Houston warned.

Iomart, the Scottish technology firm, has called on the government to differentiate between types of firm when they assess their carbon tax bills. Director Phil Worms said: "To be perfectly honest, the scheme is a PR puff. It doesn't look at the different type of users. It's bizarre to compare us to a local authority."