A new tax aimed at reducing carbon emissions could double energy costs for businesses and public bodies in Northern Ireland within five years, according to research to be published tomorrow.
Energy prices in the province are already the highest in the UK, and considered a disincentive to inward investment. The new charge has been described as an "unjust stealth tax" even by the Green party.
The report by Carbon Masters, an Edinburgh University start-up funded by the Scottish government, warns that organisations in Northern Ireland face bills of up to £5m a year more than those of equivalent size in the rest of the UK. It found that unless steps were taken to reduce carbon emissions, Queen's University Belfast would pay £36.6m in energy costs between 2012 and 2016, while an English university of a comparable size would pay £18.9m. The South Eastern Education and Library Board would spend £27.1m, compared with £10.2m for a similar-sized body in England.
The Northern Health and Social Care Trust would have to pay £28.9m compared with £18.4m for a comparable English organisation. The report is being issued to public bodies across the province.
It follows a week in which deep budget cuts were proposed, and £300m was deducted from the Northern Ireland block grant.
Under the Carbon Reduction Commitment Energy Efficiency (Crcee) scheme, organisations that consume more than 6000MWh of electricity each year will have to pay a tax of £12 per ton of carbon they produce from April 2012 onwards. The original scheme rewarded organisations who performed well with revenue recycling payments, but the cash incentives were withdrawn last November. Kevin Houston, director of Carbon Masters, said: "Northern Ireland has, for a number of reasons, endured energy prices higher than the rest of the UK and, with this legislation, that gap will widen." He estimates that the minimum tax charge for qualifying businesses in Northern Ireland will be about £47,000.
"The burden of higher energy prices will inevitably be passed onto consumers and taxpayers, said Houston, who advises the EU on carbon mitigation in the IT industry. "Businesses and government bodies have a responsibility to lessen their impact but our research shows those in Northern Ireland have so far failed to do so."
The report – The Impact of CRC Legislation on Northern Ireland – says the province's lack of indigenous energy sources, high costs of transportation and slow liberalisation of the energy market have resulted in high energy prices.
Professor Mike Smyth, head of the economics department at the University of Ulster, has blamed the Stormont executive for failing to anticipate the impact of the tax. "We have known this was coming for so long. The carbon tax was always going to disadvantage Northern Ireland, because we still get a lot of our electricity from oil and coal. There was benign neglect under direct rule. But the real blame belongs with devolution."
