UK business lobby wants CO2 tax cut for industry

LONDON (Reuters) - British energy intensive businesses must be exempted from paying a carbon tax to avoid putting them at a competitive disadvantage, the head of Britain's largest business lobby, CBI, said on Tuesday.

He proposed the government should introduce a rebate on the carbon tax, which is due to be introduced in April 2013, based on how energy efficient the businesses are.

"The CBI supports the carbon floor price in principle, but we have to see exemptions for those industries most at risk - those very industries that a critical part of our low-carbon economy," said the CBI's director general, John Cridland, at the organization's energy conference on Tuesday.

In its March budget the Treasury announced the introduction of a minimum price for carbon of 16 pounds per tonne from April 1, 2013, which will rise to 30 pounds per tonne by 2020.

Businesses could face a carbon floor price of up to 54 euros a tonne by 2020, analysis from Thomson Reuters company Point Carbon showed, which compares to a current EU carbon allowances price of around 17 euros.

Cridland also called for an extension of gas field allowances, softening tax rates for gas producers of marginal fields.

The March budget also imposed an immediate tax rate increase on offshore oil and gas production, leading some producers to idle fields which have become unprofitable to run.

"We'll see weakened North Sea investment, increased reliance on imported gas and higher prices for business and domestic consumers," Cridland said.

(Reporting by Karolin Schaps)