London, 1st December 2021 – Following the announcement that the UK Emissions Trading System Cost Containment Mechanism (CCM) has been triggered, the Energy Intensive Users Group (EIUG) calls on Government to take action to contain escalating costs for energy intensive industries (EIIs).
The CCM was triggered after the monthly average carbon price in September, October and November was above the threshold price of £52.88. The principle of the CCM is to enable the UK ETS Authority to intervene in the event that carbon prices are elevated for a sustained period. UK Government claims that the CCM is more responsive than its EU equivalent. Now Government must back up that claim and take action to contain escalating industrial costs so that UK EIIs are not placed at further competitive disadvantage in international markets.
Dr Richard Leese, the EIUG Chair, commented:
‘UK EIIs have been struggling with the unprecedented high energy costs and a UK carbon price that has been at a premium to the EU carbon price since the middle of August. The UK Government continues to delay taking action to mitigate the cumulative cost of high UK energy and carbon prices. The CCM provides an opportunity for Government to take action. It must do so’.
EIUG Contact: Director – Energy Intensive Users’ Group (firstname.lastname@example.org)
Notes to editors:
The EIUG represents the UK’s Energy Intensive Industries (EIIs) including manufacturers of steel, chemicals, fertilisers, paper, glass, cement, lime, ceramics and industrial gases. EIUG members produce materials which are essential inputs to UK manufacturing supply chains, including materials that support climate solutions in the energy, transport, construction, agriculture and household sectors. They add an annual contribution of £38bn to UK GDP, supporting 200,000 jobs directly and 800,000 jobs indirectly around the country.
These foundation industries are both energy and trade intensive – remaining located & continuing to invest in the UK and competing globally requires secure, internationally competitive energy supplies and freedom to export without tariff barriers. However, inward investment, growth and competitiveness have been hampered for years by UK energy costs higher than those of international competitors. In some cases, investment, economic activity & jobs have relocated abroad, leading to a subsequent increase in imports.
As the UK left the EU ETS on 31
December 2020, the price of an EU ETS allowance was £29.43, while the rounded
average EU ETS price over 2020 was £22. Adjusting the Auction Reserve Price to
£22 mitigates the risk of a significant fall in the UK carbon price which could
undermine confidence in the new UK scheme.
 EXPLANATORY MEMORANDUM TO THE GREENHOUSE GAS EMISSIONS TRADING SCHEME AUCTIONING REGULATIONS 2021