Jim Ratcliffe has thrown his support behind Conservative proposals to scrap carbon taxes, intensifying the debate over the cost of net zero policies and their impact on UK industry.
The billionaire founder of Ineos said he welcomed plans from Kemi Badenoch to remove levies on carbon emissions, arguing that current policies are undermining competitiveness and driving 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 risks damaging domestic industry.
The Conservative proposal would scrap carbon pricing mechanisms such as the UK Emissions Trading Scheme (ETS), which requires industrial firms to purchase allowances to cover their emissions.
Supporters of the move argue that these costs place UK manufacturers at a disadvantage compared with international competitors, particularly in countries where carbon pricing is less stringent or absent.
Major industrial players, including ExxonMobil and Huntsman Corporation, have echoed these concerns, warning that high carbon costs are eroding margins, threatening jobs and contributing to the relocation of production overseas.
Paul Greenwood of ExxonMobil’s UK operations said his company pays “hundreds of millions of pounds” annually in carbon-related costs, while Peter Huntsman described the current system as a driver of “deindustrialisation”.
Carbon levies also feed directly into electricity costs. Under the UK’s Carbon Price Support mechanism, introduced in 2013, power generators must pay for emissions associated with fossil fuel use.
Because gas-fired power stations often set the wholesale electricity price, these costs are passed through to consumers, increasing bills across the economy.
Analysis from energy think tank Ember suggests that carbon taxes account for a significant proportion of generation costs, with implications for both businesses and households.
The proposal has exposed a sharp political divide over the future of the UK’s energy and climate policy.
Badenoch said scrapping carbon taxes would help reverse decades of industrial decline and strengthen national resilience, arguing that current policies are making it harder for businesses to operate competitively.
However, critics warn that removing carbon pricing could undermine efforts to reduce emissions and transition to cleaner energy sources.
Greenpeace UK has argued that carbon taxes remain a critical tool for driving investment in low-carbon technologies, while also questioning how the government would replace the lost revenue.
Scrapping carbon levies could also put the UK at odds with international frameworks, particularly the European Union’s planned carbon border adjustment mechanism, which is designed to level the playing field for industries facing carbon costs.
A divergence in policy could create new trade complexities, particularly for exporters operating across European markets.
Trade bodies representing energy-intensive sectors, including the Chemical Industries Association and Ceramics UK, have warned that many green technologies required to decarbonise industry are not yet commercially viable.
As a result, companies argue they are being forced to bear high costs without access to practical alternatives, creating a risk of plant closures and reduced investment.
The debate over carbon taxes reflects a broader challenge facing policymakers: balancing the need to reduce emissions with the imperative to maintain economic competitiveness and energy security.
For businesses, the outcome will have significant implications for costs, investment decisions and long-term strategy.
For the government, the question is whether adjustments to the current framework can address industry concerns without undermining progress towards net zero.
As pressure mounts from both industry and environmental groups, the future of carbon pricing is set to remain a central issue in the UK’s economic and energy policy agenda.
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Ratcliffe backs tory plan to scrap carbon taxes amid industry pressure