Government Emissions Plan Will Backfire

Press release issued Monday 19th January 2004 – 11:00 am

The Energy Intensive Users Group reacted with incredulity at today’s announcement that the government proposes to impose swingeing cuts in CO2 emissions far in excess of our international commitments under the Kyoto protocol. The UK is the only country in the world to make such a proposal. EIUG warns this will lead to uncompetitive electricity prices, forcing industry offshore where production costs and environmental controls are lower. Global emissions will rise, not fall, as a result.

EIUG’s Director, Jeremy Nicholson, said: “These proposals are counterproductive – they will simply drive industry offshore and raise global emissions. The UK is not in the lead – we are isolated.”The proposal appears in the draft National Allocation Plan in preparation for the UK’s participation in the EU emissions trading scheme, designed to ensure EU countries meet their Kyoto commitments. However, as the EU’s own Energy Commissioner Loyola de Palacio has recently admitted, it would be “suicide” to go ahead with these commitments if countries like the USA and Russia are not also on board, because of the damage to competitiveness. Despite this, the UK government wants to be alone in Europe in going even further, with little apparent regard for the consequences.

Notes to editors:

  1. The EIUG represents the UK’s industrial sectors for which secure internationally competitive prices are a matter of commercial necessity.
  2. The EU emissions trading scheme is supposed to go live in 2005, although doubts are increasingly being raised about the practicality of this timetable. The EU is the only part of the world where such a scheme is being considered.
  3. The EU’s competitors like China, India and other developing countries have no obligations to restrain emissions under the Kyoto protocol. The USA and Australia have rejected the treaty altogether. The Kyoto protocol cannot now come into force unless ratified by Russia, which has yet to make up its mind. President Putin’s economic adviser has said Kyoto “dooms Russia to poverty, weakness and backwardness” and would be “a millstone for Russia’s economy”, suggesting it is unlikely to ratify.
  4. UBS Warburg predicted a rise of over 80% in wholesale electricity prices by 2010 mainly as a result of the costs of EU emissions trading (‘The greening of UK electricity’, March 2003).