Tories pledge to scrap carbon taxes on industry

The Conservative Party has said it would scrap carbon taxes on British industry if it won power, arguing such a move would protect jobs in energy-intensive sectors.

Conservative leader Kemi Badenoch has argued the carbon tax regime is contributing to deindustrialisation and she wants to remove it "in its entirety".

This would include the UK Emissions Trading Scheme (ETS), which aims to limit the amount of carbon that can be emitted each year by the heavy industry, power and aviation sectors.

Labour said the Tory proposal would "hammer industry", while the Energy and Climate Intelligence Unit (ECIU), a climate action think tank, said firms would still face carbon charges from the European Union.

The Conservatives had already proposed removing the ETS as it applies to electricity generation.

The UK ETS was established in 2021 to replace a similar European scheme following Brexit.

It was brought in when the Conservatives were in power and Badenoch helped support the scheme's introduction during her time as a Treasury minister.

But Badenoch has made clear that under her leadership the Conservatives believe the target of net zero by 2050 - meaning the UK must cut carbon emissions until it removes as much as it produces - is "impossible".

The Conservatives have pledged to scrap the UK's landmark climate change legislation and replace it with a strategy for "cheap and reliable" energy.

The Climate Change Act 2008, which put targets for cutting emissions into law, was introduced by the last Labour government and strengthened under Conservative Prime Minister Theresa May.

Badenoch said business bosses had told her that carbon taxes and green levies have made "doing business in Britain much, much harder than it needs to be".

She said: "We all want to leave a better environment for the next generation, but it is madness to pursue that goal by killing British industry and fatally weakening our national resilience."

Ceramics UK chief executive Robert Flello said high energy costs have become an "existential issue" for the industry, adding it "cannot afford to keep paying a carbon tax that our competitors simply don't face".

The Office for Budget Responsibility last month said emissions trading scheme receipts are expected to be £2.6bn in 2025/26, a 24.3% decrease compared to the previous financial year.

The Tories have said their plans also include scrapping the carbon price support, a levy paid by fossil fuel electricity producers, and the carbon border adjustment mechanism (CBAM).

The CBAM will be introduced by the UK government in January next year and is a carbon levy on imported goods that aims to stop UK firms being undercut by overseas manufacturers.

Jess Ralston, head of energy at the ECIU, said a "well-designed" CBAM could help "rejuvenate British industry, helping make it more competitive with other cheaper countries, and many businesses have been calling for one for years".

She said: "But it's predicated on a UK carbon price and, if we don't have that, revenues that would have been going to Treasury will instead by transferred into EU coffers when British industry exports to the EU, our largest trading partner."

Energy Minister Chris McDonald said of Badenoch: "It's a total embarrassment for her to, yet again, be railing against her own work in government. Her new pledge is wrong and it would hammer industry."

The Labour MP said the proposal "would leave working people picking up the bill" before he argued his party's industrial strategy would "make Britain the best place to do business".

Reform UK has also said it would scrap all carbon taxes, including CBAM, if it won power.

The Liberal Democrats support using carbon taxes to achieve net-zero emissions.

The Green Party has proposed a major carbon tax on all fossil fuel imports and domestic extraction.