Steel giant says carbon floor price will make UK steel makers uncompetitive

Tata has warned a new carbon tax will deal “a potentially severe blow” to the steel manufacturing giant.

The plan to introduce a floor price for carbon unveiled in Wednesday’s Budget will make UK steel makers less competitive, Tata said.

Karl-Ulrich Köhler, head of Tata Steel’s European operations, said the tax was “exceptionally unhelpful and potentially damaging”.

The chancellor George Osborne unveiled the new minimum price for carbon emissions on Wednesday to help fund investment in green energy.

The floor price will be set at £16 per tonne from 2013, rising to £30 a tonne by 2020.

Osborne said in his Budget: “This will provide the incentive for billions of pounds of new investment in our dilapidated energy infrastructure.”

The Budget predicts the levy will raise more than £740m for the Treasury in 2013-14, rising to just over £1bn in its second year and £1.4bn in its third year.

But Tata fears the floor price will hit energy-hungry industries including steel hard, resulting in UK steel beingtata steelcarbonosborne less competitive.