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Industrial energy users warn that UK
plans to act unilaterally in taxing carbon emissions from power generation
will render UK
electricity supplies increasingly uncompetitive.
The Energy Intensive Users Group (EIUG) represents producers
of steel, paper, cement, lime, aluminium, basic inorganic chemicals, glass,
ceramics and industrial gases that currently employ some 225,000
workers. These industries are highly energy efficient but
nevertheless consume large quantities of energy, which can account for
20%-70% of their production costs. They operate in global markets and
therefore depend on access to internationally competitive energy supplies
to remain in business, yet the products they make are needed to help the
government deliver on its plans for a low carbon economy.
EIUG supports the principle of pricing carbon into the power
market to encourage investment in nuclear and other forms of secure, low
carbon generation. But the plans outlined in last week’s Budget
will see UK
energy consumers facing double the carbon costs of our European
competitors, adding millions to the cost of manufacturing energy intensive
products in this country. In the absence of measures to mitigate the
impact, energy intensive industries will find it harder to attract
investment, encouraging production to move to countries where energy costs
are more competitive. The result – ‘carbon leakage’
– does nothing for the global environment and undermines the
government’s efforts to encourage industrial growth.
EIUG welcomes confirmation that the 80% Climate Change Levy
discount for intensive industries is to be restored, but points out this is
a drop in the ocean compared with the impact of the carbon tax and other
cost-raising climate measures. Figures released in the Budget suggest
that the uplift in electricity prices as a result of the carbon tax will be
around four times the size of the reduction caused by restoring the CCL
discount – a difference that will widen further as the tax rises in
line with Treasury’s targets for the decade ahead. As part of
its response to Treasury’s recent consultation on Carbon Price
Support, EIUG commissioned an update report on the cumulative impact of
climate change policies that confirms the scale of the threat to energy
intensive industries (see link/s below).
EIUG Chairman Steve Elliott said:
“The products of energy intensive industries, such as
materials for solar panels and wind turbines, insulation and electric car
components are leading the transition to a low carbon economy.
Forcing the development and manufacture of these products abroad will not
help us remove carbon from the lifecycle of products essential to modern
life. This measure also threatens the ability of the industrial
customer base to provide demand for the same electricity generators the
scheme is incentivising.”
EIUG Director Jeremy Nicholson said:
“The burden of an escalating carbon tax will fall on
electricity consumers, making the UK an increasingly unattractive
place to site manufacturing businesses. Government must come clean
about the impact of the carbon tax on energy intensive industries and see
what can be done in the context of the ongoing Electricity Market Reforms
to mitigate the cumulative burden of this and other climate
policies.”
Media enquiries:
Jeremy Nicholson, EIUG M: 07785
280568
Further information:
The
Cumulative Impact of Climate Change Policies on UK Energy Intensive
Industries – Update Against New Government Policy:
EIUG Response to Treasury Carbon
Price Support Consultation:
EIUG Website
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© Energy Intensive Users
Group
29 March 2011
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