Conservatives will axe carbon tax to save British industry

• The Conservative Party will axe the Carbon Tax entirely to stop the deindustrialisation of Britain and cut bills
• Labour's Carbon Taxes are forcing factories to close, driving jobs overseas and leaving Britain dependent on higher-cost imports
• Conservatives' fully costed Cheap Power Plan will cut household energy bills by around £200 and deliver cheap, reliable power

Today [Thursday 2^nd April 2026], the Conservative Party have announced we will axe the Carbon Tax entirely to stop the deindustrialisation of Britain and cut bills.

The Conservatives had previously announced plans to remove the Carbon Tax from electricity generation. Today's announcement goes much further, in lifting the multi-billion-pound Carbon Tax burden from British industry.

The UK's Carbon Tax regime, made up of the UK Emissions Trading Scheme (ETS) and Carbon Price Support (CPS), places immense cost on British industry. Originally designed to drive down emissions, in practice, it is taxing our energy intensive industries out of existence.

The Carbon Tax is a tax on energy use and a tax on British production. Some companies, like refineries, face annual Carbon Tax bills in the tens of millions per year – larger than their wage bill – and they are projected to double in the coming years as Labour increases the Carbon Tax to reach Net Zero. That is why the Conservative Party is committed to abolishing the Carbon Tax in its entirety to stop the deindustrialisation of Britain.

British manufacturers have been left competing at an embedded disadvantage against international rivals who face no equivalent carbon costs. Countries such as China, India, Turkey, and many in the Middle East do not impose comparable taxes.

Axing the Carbon Tax will also allow us to abolish the Carbon Border Adjustment Mechanism (CBAM). Labour's CBAM raises the cost of fertiliser and key raw materials like metal and cement, increasing costs on families and businesses across the entire economy.

Britain lost a third of our refineries last year alone, chemicals production has collapsed by 60 per cent, and output from energy-intensive industries has fallen to its lowest level in 35 years. We no longer produce ammonia, car manufacturing has sunk to levels not seen since the 1950s, and factories across the country are shutting their doors. From refining to chemicals to manufacturing, the foundations of our economy are being stripped away and replaced by less secure, higher-emission imports from abroad.

Heavy industry, chemicals, ceramics, glass making, refining, and other energy-intensive sectors have seen sharp declines in output. Domestic production is replaced by imports from countries with higher emissions. Every time an industry shuts down in Britain to be replaced by more polluting foreign imports, this is counted as a win for our climate targets, despite global emissions rising. This is why the Conservatives would also start measuring the offshoring of domestic emissions through deindustrialisation.

Right now, as families face rising energy costs, jobs are disappearing thanks to Labour's refusal to capitalise on the resources in the North Sea. In contrast, the Conservatives' plans Get Britain Drilling our own oil and gas will make Britain more resilient to global energy supply shocks, increase tax revenue so we can get bills down, and support jobs.

Further to this the Conservative Party's new Cheap Power Plan would remove VAT from household energy bills for the next 3 years, providing immediate relief for consumers with an average saving of £94 per household per year.

Unlike Reform, the Conservatives have a fully costed plan. The Cheap Power Plan will be paid for by scrapping various taxpayer-funded Net Zero schemes, including Ed Miliband's GB Energy, heat pump subsidies, and abolishing the Renewable Obligation subsidies currently being funded through general taxation. It will also lead to cheaper energy for businesses.

Increased investment in oil and gas extraction will generate billions of pounds in tax revenue which can be used to reduce the wider tax burden.

The Conservatives are the only party with a plan to secure cheap, reliable energy for the long term, supporting families and businesses and providing the power to Get Britain Working Again.

Kemi Badenoch MP, Leader of the Conservative Party, said:

“As a former Business and Trade Secretary, I have heard from countless bosses how carbon taxes and green levies have made doing business in Britain much, much harder than it needs to be. It's time to reverse decades of deindustrialisation, by doing what Keir Starmer lacks the backbone to do: axe the Carbon Tax in its entirety.

“We all want to leave a better environment for the next generation, but it is madness to pursue that goal by killing British industry and fatally weakening our national resilience. Under my leadership, the Conservatives are backing British businesses and making sure we can secure cheap, reliable energy and get Britain working again.”

Claire Coutinho MP, Shadow Energy Secretary, said:

“We are losing the ability to make things in Britain. From refineries, to chemical plants, to manufacturing, we are losing jobs and factories here only to import more of the same goods from abroad with higher emissions. Deindustrialising our economy in the name of Net Zero is making us a warning, not an example, to the rest of the world.

“Our industrial power is our hard power – it is the power we turn to in times of crisis or conflict. We must axe the Carbon Tax to save British industry and create a stronger economy and stronger country.”

Andrew Griffith MP, Shadow Business Secretary, said:

“The decisions made by this Labour Government are destroying British industry, weakening our security and driving thousands of high-skilled manufacturing jobs overseas.

“Our proposals to axe the carbon tax are a common-sense change to reduce the burden on business and make Britain a place where industry can invest and grow again.”

Ben Houchen, Mayor of the Tees Valley, said:

“Scrapping the Carbon Tax is the right call for places like Teesside, where our industrial strength and highly skilled workforce are central to the UK's future growth. We cannot continue to price our own industries out of global markets or put local jobs at risk with policies that don't reflect economic reality.

“We can never let Net Zero be pursued at the expense of jobs or prosperity in communities like ours, and this is a welcome and sensible step to bring British businesses back into the game.”

Paul Greenwood, UK Chair ExxonMobil, operators of the Fawley refinery in Hampshire, said:

"The UK refining industry pays hundreds of millions of pounds in CO2 costs every year that many of our international competitors do not pay.  The Government has refused to level the playing field by passing those same costs onto our competitors – that is both unfair to British workers and dangerous for UK energy security.  We support policies that create a level playing field and allow us to continue building the strong refineries on which this country depends.  Continuing as is, risks both jobs and our national security"

"Economies run on products – steel for bridges, cement for foundations, and fuels that keep people and goods moving and raise living standards. We need a system that accounts for the carbon emitted as these products are created, not just in the UK but wherever in the world that happens. A ledger-based carbon emissions accounting framework can help ensure that carbon footprints are understood no matter the origin of the product."

Peter Huntsman, Chairman, President and CEO of Huntsman Corporation, operators of the Wilton Aniline plant in Teesside, said:

“The Carbon Tax, along with banning domestic energy production, is driving the deindustrialization of Britain, pushing up costs, weakening competitiveness and destroying jobs and livelihoods. Scrapping the Carbon Tax is a step in the right direction, along with lifting bans on the extraction of oil and gas to help restore competitiveness in the chemicals and refining industries, manufacturing the basic building blocks of modern society.”

Robert Flello, Chief Executive of Ceramics UK, said:

“High energy costs have become an existential issue for the UK ceramics industry. There is no switch our members can flick to decarbonise overnight, so the Carbon Tax just acts as a tax on British industry and British jobs.

“The ceramics industry cannot afford to keep paying a Carbon Tax that our competitors simply don't face. Scrapping it would be a huge relief for the industry and halt the deindustrialisation of Britain.”

Steve Elliott, Chief Executive of the Chemical Industries Association, said:

“UK carbon policies should drive decarbonisation.  Increasingly they do not.  Since early 2021,  UK chemical sector emissions have fallen by 60%, but so too has chemical sector output – the clearest signal yet that we are delivering decarbonisation through deindustrialisation. 

“Tightening our national carbon targets without giving industry access to the essential tools to decarbonise, alongside effective carbon leakage protection measures,  has created a recipe for site closures, job losses and investment flight. 

“Despite our long-standing recommendations, policy choices, or the lack of, continue to lock in deindustrialisation.

“A more radical and supportive approach (to securing energy and reducing carbon) is now essential if the UK is serious about economic growth, jobs and resilience in an increasingly competitive and volatile world.”

ENDS

Notes to Editors

The Carbon Tax is making our industry uncompetitive:

• The Carbon Tax is a costly burden on British industry. Industrial businesses like food manufacturers, ceramics manufacturers, car plants and cement plants must pay a tax for every tonne of CO2 they emit. Many of these businesses are extremely energy intensive and would find it impossible or expensive to decarbonise, so the Carbon Tax acts as a punitive de-facto tax on energy consumption and a tax on making things in Britain (UK Government, Compliance Report – Emissions and Surrenders, June 2025, link). 

• Our competitors, like Turkey, India, China and the Middle East don't charge a Carbon Tax at all – putting British firms at a huge disadvantage. ELIZABETH DE JONG, FUEL INDUSTRY UK: “Because of the carbon prices that are paid in our country but not abroad, our output declines, our industry shuts and we bring in imports from other countries that do not have to pay a carbon tax. Those imports are higher carbon than the products we make in this country. We are beginning to achieve our climate targets, but global emissions are going up because of our decision.” (ESNZ Select Committee Oral Transcript, UK Refineries and the role of oil and gas, 29 October 2025, link). 

• The Carbon Tax costs some businesses tens or hundreds of millions of pounds a year and it is projected to increase significantly in the coming years. Paul Greenwood, Fawley Refinery: “We are currently paying £70 million to £80 million a year in CO2 costs [at Fawley refinery]. That will go up to £150 million in the next four or five years, and our competitors are not paying any... that is what is causing refineries to shutter in the UK.” (ESNZ Select Committee Oral Transcript, UK Refineries and the role of oil and gas, 29 October 2025, link). 

• INEOS boss Sir Jim Ratcliffe says the Carbon Tax is “killing manufacturing” in the UK. Sir Jim Ratcliffe: “We now must scrap carbon taxation, the most idiotic tax in the world. It simply squeezes the life out of home production as there is no cash left for investment and we end up replacing home produced goods with imported products from places that still burn coal. An utterly ridiculous tax that kills industry and increases global CO2 emissions.” (The Scotsman, 18 December 2025, link). 

This means Britain is deindustrialising at an alarming rate:

• Britain lost a third of its refineries last year alone. The Grangemouth and Prax Lindsey oil refineries both shut down in 2025, with Grangemouth paying a £15 million Carbon Tax bill in 2024 alone (The Independent, 29 April 2025, link). 

• Our chemicals manufacturing has fallen by 60 per cent in just four years. “Chemical sector emissions have decreased 60 per cent between 2021-2025. Unfortunately, only a mere 4 per cent of this emission reduction was as a result of decarbonisation, with the remaining 56 per cent due to site closures reflecting the equivalent 60 per cent drop in UK chemicals sector production” (Chemical Industries Association, Letter to the Prime Minister, 3 March 2026, link). 

• Our output of energy-intensive manufactured goods fell by a third in just three years, to its lowest level in 35 years. In Quarter 4 2024, the index of production for the UK manufacturing EIIs was at its lowest point since the start of the available time series in 1990 (ONS, The impact of higher energy costs on UK businesses: 2021 to 2024, 19 May 2025, link). 

• Britain can no longer make ammonia, which is the key ingredient in both fertiliser and explosives. The closure of CF Industries' ammonia plant in Billingham in 2023 marked the end of ammonia production in Britain. This was the cleanest ammonia production facility in Europe, which was taxed into the ground through climate taxes, meaning we now import dirtier ammonia from abroad (CF Industries, plant closure press release, July 2023, link; EU Joint Research Centre, emission intensities of the steel, fertilisers, aluminium and cement industries in the EU and its main trading partners, September 2023, link). 

• The UK is manufacturing fewer cars than at any point since 1952. Vehicle output fell to the lowest level for the month since 1952, excluding 2020 when the first Covid lockdown effectively saw manufacturing cease. (SMMT, UK car and commercial vehicle output falls in April, 29 May 2025, link). 

• We have recently lost Denby pottery, a glass fibre factory and a plastics plant, and we may be about to lose the last remaining industrial salt plant in the UK. Inovyn's salt factory in Runcorn – vital for pharmaceuticals, plastics, chemicals, explosives and water purification – is on the brink of collapse. All of these sites are crippled by huge Carbon Taxes which are forcing them to shut down, yet all of them produce goods which are the building blocks of a modern economy and will therefore simply be replaced by imports. 

The Conservative Party has a plan to abolish the Carbon Tax:

• We will axe the Carbon Tax to save British industry. We will abolish the UK Emissions Trading Scheme (ETS) and Carbon Price Support (CPS), lifting a multi-billion tax burden off our foundational industries. 

• We will abolish the CBAM to reduce the cost of living. Without a Carbon Tax, there is no justification for the CBAM, which is effectively a carbon tariff which will push up the cost of fertiliser, steel and foundational goods throughout the economy. 

• We will make Government start measuring the offshoring of emissions. Every time an industry shuts down in Britain to be replaced by more polluting foreign imports, this is counted as a win for our climate targets, despite global emissions rising.