Jim Ratcliffe has backed Conservative proposals to scrap carbon taxes, intensifying debate about the costs of net zero measures and their impact on British industry.
The billionaire founder of Ineos said he welcomed Kemi Badenoch’s plans to scrap levies on carbon emissions, arguing that current policies undermine competitiveness and drive up energy costs for businesses and households.
Ratcliffe said he supported a pragmatic approach to energy policy that ensures affordability while maintaining environmental goals, warning that excessive taxation could harm domestic industries.
The Conservative proposal would scrap carbon pricing mechanisms such as the UK’s Emissions Trading Scheme (ETS), which requires industrial companies to buy allowances to cover their emissions.
Supporters of the move argue that these costs put British manufacturers at a disadvantage compared to international competitors, particularly in countries where carbon pricing is less stringent or non-existent.
Major industrial companies, including ExxonMobil and Huntsman Corporation, have seized on these concerns, warning that high carbon costs are hurting margins, threatening jobs and helping to shift production offshore.
Paul Greenwood from ExxonMobil’s UK office said his company was paying “hundreds of millions of pounds” a year in carbon-related costs, while Peter Huntsman described the current system as driving “de-industrialisation”.
CO2 taxes also have a direct impact on electricity costs. Under the UK’s carbon price support mechanism, introduced in 2013, electricity producers are required to pay for the emissions associated with the use of fossil fuels.
Because gas-fired power plants often set the wholesale price of electricity, these costs are passed on to consumers, increasing bills throughout the economy.
An analysis by energy think tank Ember suggests that carbon taxes account for a significant portion of generation costs, impacting both businesses and households.
The proposal has exposed a sharp political divide over the future of Britain’s energy and climate policy.
Badenoch said abolishing carbon taxes would help reverse decades of industrial decline and strengthen national resilience, arguing that current policies make it difficult for companies to operate competitively.
But critics warn that eliminating carbon pricing could undermine efforts to reduce emissions and transition to cleaner energy sources.
Greenpeace UK has argued that carbon taxes remain a crucial tool to encourage investment in low-carbon technologies, but has also questioned how the government could replace the lost revenue.
Removing carbon taxes could also put the UK at odds with international frameworks, particularly the European Union’s planned carbon border adjustment mechanism, which aims to create a level playing field for industries facing carbon costs.
A divergence in policies could create new trade complexities, particularly for exporters operating in European markets.
Trade associations representing energy-intensive sectors, including the Chemical Industries Association and Ceramics UK, have warned that many green technologies needed to decarbonise the industry are not yet commercially viable.
As a result, companies argue that they are forced to bear high costs without access to practical alternatives, bringing with them the risk of factory closures and reduced investment.
The debate over carbon taxes reflects a broader challenge facing policymakers: balancing the need to reduce emissions with the need to maintain economic competitiveness and energy security.
For companies, the outcome will have a significant impact on costs, investment decisions and long-term strategy.
The question for the government is whether adjustments to the current framework can address industry concerns without jeopardizing progress towards net zero.
As pressure mounts from both industry and environmental groups, the future of carbon pricing will remain a key issue on the UK’s economic and energy policy agenda.
