CBI director-general John Cridland said that recent changes to energy policy had put too much cost pressure on energy intensive sectors and created too much uncertainty for energy investors.
The skewed tax policy meant that it would soon cost less for construction companies to import cement from Spain than to produce it in the UK.
Mr Cridland said: “In the past, we tried to weigh up attempts to reduce carbon emissions together with the needs of industrial users. Today, this seesaw has become a three-way balancing act, with the new third element being the government’s need for revenues.
“Over the last year the government has triple-dipped into the industry till because of the need to raise revenue, with the Carbon Reduction Commitment, Carbon Floor Price and the recent hike in oil and gas tax.
"At a time when rebalancing of the economy needs UK manufacturing to be playing a bigger role, energy-intensive industrial users need more help. But the Budget unilaterally increased their cost base," he said.
Mr Cridland said that investment decisions were starting to be affected by the policies. "We’re already seeing warnings from companies like Ineos that its chlorine plant in Runcorn could become uneconomical under the sudden introduction of the proposed carbon floor price. Tata steel is facing the same problem. One major construction company is now finding it will soon cost less to import its cement from Spain than to produce it at its UK plant.
"Yet Tata makes the steel that goes into the turbines. Ineos makes the lubrication that helps the blades turn. And we need up to 150 tonnes of cement to generate every megawatt of offshore wind."
Setting out what is required, Mr Cridland said: “On the Carbon Reduction Commitment (CRC), the CRC was meant to be green, aimed at encouraging energy efficiency by recycling financial incentives. Well, not any more it isn’t. It’s just a cost, and a complex scheme. So the government should axe the CRC as it stands. If it wants a green tax, it should do the job properly.”
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