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Ineos Says U.K. Carbon Floor Price May Force Manufacturers Out

June 17 (Bloomberg) -- New U.K. rules setting a minimum price for carbon dioxide from power generation are unlikely to cut greenhouse gas emissions and risk driving manufacturers abroad, chemicals company Ineos Group Holdings Plc said.

Ineos units based at Grangemouth in Scotland have written to Chancellor of the Exchequer George Osborne to warn him of “grave consequences” for U.K. manufacturing should he proceed as planned in 2013 with the carbon-trading price floor, Richard Longden, a spokesman for Ineos, said in an e-mail. The company’s Scottish facilities include an oil refinery and manufacturing plants.

“Ineos believes that if implemented, carbon price support is unlikely to have the desired environmental impact it is set out to achieve,” Longden said. “Manufacturing is more likely to move outside of the U.K. where environmental legislation is more conducive to energy-intensive manufacture.”

Osborne said in March that starting from April 1, 2013, the U.K. will set a carbon tax on electricity generation at 4.94 pounds per metric ton of CO2. That payment is additional to the permits generators are required to buy under the European Union Emissions Trading System.

The measure “will disadvantage U.K.-based energy intensive industries compared with competitors in Europe and the rest of the world,” Longden said. His comments follow a statement three days ago from the U.K. business lobby, the Confederation of British Industries, which said the country’s biggest power users should be exempt from the tax.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Catherine Airlie in London at cairlie@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net; Mike Anderson at manderson34@bloomberg.net

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