Tax breaks for energy intensive industries could be among a package of measures designed to help the UK’s industrial base remain competitive following the introduction of further carbon pricing mechanisms to be unveiled before the end of the month.

Climate change minister Greg Barker told a meeting of the Energy Intensive Industries All-Party Parliamentary Group yesterday that the details of the support package, first proposed as part of July’s Electricity Market Reforms, will be announced on 29 November.

A spokesman for Tristram Hunt MP, who chairs the Energy Intensive Industries All-Party Parliamentary Group, said that, as rumoured last month, Barker promised that the support package will focus on electro-intensive industries, such as steel or aluminium production.

“There was a suggestion that the climate change levy might be widened and the rebate increased … to mitigate the carbon price,” he said. “But it’s all speculation at the moment.”

The CBI has been leading a campaign warning that large energy users such as steel makers or cement companies could be forced abroad if the government’s plans to put a floor price on carbon emissions results in higher energy prices.

The employers’ association warned in a report released in August that the policy could leave a £15bn hole in the economy, while having a limited impact on overall carbon emissions which would instead be exported to countries with less demanding carbon pricing regimes.

Tata Steel and chemicals firm Ineos have written to the prime minister asking for an exemption from the carbon floor price, which could amount to around £300m each year from 2013 to 2020.

Jeremy Nicholson, director of the Energy Intensive Users Group, said that, while Barker could not yet confirm any details of the package, he was receptive to the idea of moving the UK closer to the German model, where large energy users pay only €0.5 of the €35 per MWh green levy.

“It was a constructive tone from the minister. There seems to be a genuine understanding in government that carbon leakage is a real risk. But we have to be realistic - the likelihood of a discount at that level may be politically problematic,” he told BusinessGreen.

“We’re looking for some degree of protection … from the effects of emissions trading from 2013, the UK-only carbon floor price and some degree of relief from escalating renewable energy support costs. You can’t build wind turbines without steel, cement and chemicals. The question is whether it will be UK materials or materials brought in from abroad.”

A Department of Energy and Climate Change (DECC) spokesman said the government wanted to ensure British energy intensive industries “remain competitive and that the UK remains open for business.”

“Yesterday’s meeting was part of DECC’s and Greg Barker’s continued engagement with key stakeholders on how to address the difficulties facing energy intensive industries,” he added, confirming a package of measures would be announced “before the end of the year.”

Any generous tax breaks are likely to be challenged by green groups, which have warned that they could undermine the integrity of the government’s carbon reduction policies