Energy-intensive industries such as steel making, cement and chemical manufacturers have been granted a £250million (€292.5million) package from UK Chancellor George Osborne to help counteract rising power costs.
Energy-intensive industries such as steel making, cement and chemical manufacturers have been granted a £250million (€292.5million) package from UK Chancellor George Osborne to help counteract rising power costs.
The Chancellor’s Autumn Statement confirmed a tax relief and compensation package would be used to shield British businesses from costly environmental legislation.
The measures include compensation for key businesses to help offset the indirect cost of the Carbon Price Floor and the European Union emissions trading system, and also increase the level of relief from the climate change levy on electricity to 90%.
Following the announcement, Dr Martyn Kenny, director of sustainability, Tarmac, said: “Tarmac fully supports the government’s efforts to tackle climate change but in moving towards a low carbon economy we are concerned that UK manufacturing and jobs are not simply shifted abroad.
“Introducing new measures, like the Carbon Price Floor, means that additional financial burdens will be passed onto UK manufacturers and these are set to hit energy intensive industries like cement and lime the hardest.
“The Carbon Price Floor sets a minimum price for carbon which will be applied to electricity from 2013 and could contribute to making it cheaper to make these products overseas, so called carbon leakage.
“That is why we very much welcome the Chancellor’s recognition of the challenges faced by the energy-intensive sectors and the news that the ‘stick’ is going to be somewhat alleviated by some ‘carrot’. The proposal that from April, 2013, the climate change levy rebate is set to increase to 90% on electricity for energy-intensive industries which enter voluntary climate change agreements is a small step in the right direction. However, it is a long way from compensating for the full effects of the Carbon Price Floor.
“The announcement that the Government is looking to compensate some key energy-intensive businesses by up to £100million (€117million) for the disproportionate impact of the Carbon Price Floor is also welcome, as is their intention to explore options to mitigate the impact of the electricity market reform policies on these industries.
“However, we need to ensure that there is a level playing field for all energy-intensive industries at risk of carbon leakage as the new rules are applied. This is not special pleading, merely an appeal for fair competitive practice as the Chancellor looks to the UK’s infrastructure sector to help get the economy back on its feet.
“We will be making this point vigorously in our submission to the government’s consultation on these proposals.”
