MANUFACTURERS’ organisation EEF is urging the Government to adopt its compensation package of measures to ease the financial burden on energy- intensive sectors.
It claims failure to address the issue will risk future investment and job creation in the UK.
The warning comes on the back of analysis, published by the Government last Friday, showing that climate policies could be adding up to 52% to electricity prices paid by energy- intensive industry by 2020 – a figure that could still underestimate the costs to industry.
EEF analysis shows that one measure alone – the Carbon Price Floor (CPF) – will cost manufacturing £250m a year when it is introduced in 2013, rising to £1.2bn by 2020. This is equivalent to one third of the sector’s entire spend on training at today’s prices.
Chemicals group Ineos has warned that Government and European proposals could add £60m a year in costs at its Runcorn chlorine site, raising fears of closure and the loss of 1,800 jobs.
However, it said talks are continuing with the Government and it hopes a solution is possible.
But, while the cost of the CPF will be most keenly felt by energy-intensive manufacturers, EEF says the impact would also be felt widely across manufacturing, including among those advanced manufacturers the Government is looking at to drive economic growth.
For example, fast-growing, non- energy intensive, small and medium- size manufacturers are likely to see their electricity bills rise significantly by the end of the decade.
EEF North West director David Ost said: “We have now reached a tipping point where the cumulative burden of UK climate change policy will make it uncompetitive for some sectors to invest and create jobs in the UK.
“Government must show it recognises the impact of its policies by swiftly bringing forward measures to ensure these key sectors remain in the UK and continue to invest here.” EEF has made its own recommendations, including direct compensation for the most electro-intensive sectors affected by the CPF; compensation for sectors affected by increased energy costs through the EU Emissions Trading Scheme; exemption from the proposed Feed in Tariffs Consumer Levy, to ensure manufacturers are not disadvantaged compared with their EU and global competitors; and additional Climate Change Levy Relief which the Government is able to increase to at least 90%, compared with its proposed rate of 80% from 2013.
