Member Article

High energy prices could hit UK manufacturers

Energy intensive manufacturers in the UK are paying significantly more for power than their German counterparts, due to the government’s approach to climate change policy.

EEF research shows that energy prices for manufacturers were 10% higher than in Germany in 2010, rising to 15% in 2013.

In response to these findings, EEF is now urging the government to honour its commitment to measures which would help the UK compete on an international stage, and ensure future investment by energy intensive companies.

Commenting, EEF Chief Executive, Terry Scuoler said: “The Chancellor recently spoke about environmental laws and regulations piling costs on the energy bills of households and companies.

“As a first step, the government must bring forward a package of measures to compensate those industries most affected by its climate change policies.

“Failure to do so will send a strongly negative signal to manufacturers who are looking at whether to make their next major investment in the UK.”

These differences can be attributed to 98.5% rebate Germany’s most energy intensive industries receive on the country’s renewable energy levy. In contrast, UK equivalents receive no relief at all.

The Carbon Price Floor, which is due for introduction in 2013, will mean that climate change policies will account for almost 25% of their energy prices, in comparison with 16% in Germany.

By 2020 climate policies could increase by up to 52% for energy firms

EEF now believes that the Carbon Price Floor will cost manufacturing £250 million when it is introduced in 2013, rising to £1.2 billion by 2020 – a figure equivalent to a third of the sectors entire training spend.

EEF have now made recommendations in four key areas, carbon price floor, EU Emissions Trading Scheme, the Feed in Tariffs Consumer Levy and additional climate change levy relief.

They have also produced evidence that 84% of energy companies have already taken action to reduce carbon emissions.

This was posted in Bdaily's Members' News section by Ruth Mitchell .