EEF calls for financial relief to aid energy-intensive sectors

16 August 2011

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A warning that future investment and job creation in the UK could be put at risk if the Government fails to offer financial relief to energy-intensive manufacturing sectors has come from the manufacturers' organisation the EEF.

This follow analysis published by the Government showing that climate policies could be adding up to 52 per cent to electricity prices paid by energy intensive industries by 2020. And 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 £1.2bbn by 2020.

And, says the EEF, while the cost of the CPF will be most keenly felt by energy-intensive manufacturers, the impact would also be felt widely across manufacturing, including those ‘advanced manufacturers’ the government is looking at to drive economic growth.

“UK Industry was already facing energy bills which made them uncompetitive before the substantial additional burden of the unilateral carbon price floor," said EEF Director of Policy, Steve Radley. "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 that it recognises the impact of its combined policies on manufacturing by swiftly bringing forward measures to ensure these key sectors remain in the UK and continue to invest here.”

In response, the EEF has made its own recommendations in four key areas:

  • Carbon Price Floor: EEF is seeking direct compensation of the pass through costs within energy prices as a result of the CFP from 2013 for the most electro-intensive sectors
  • EU Emissions Trading Scheme: the EU ETS Directive allows for Member States to provide compensation to certain sectors from increased energy costs resulting from electricity generators passing on their direct EU ETS costs. EEF is calling on the UK government to exercise this provision for the benefit of these crucial sectors
  • Exemption from the proposed Feed-in Tariffs Consumer Levy
  • Additional Climate Change Levy Relief: the Government has the ability to increase the rate of relief from the CCL to sectors within a Climate Change Agreement to at least 90 per cent without the need for State Aids approval — but the Government proposed rate of 80 per cent from 2013 falls significantly short of addressing cost increases resulting from the CFP. Even 90 per cent relief doesn’t adequately address this shortfall, but is a measure that Government can implement quickly and easily



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