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Climate change policies threaten future

23 July 2010

The combined impact of Government’s climate change policies is imposing significant costs on the UK’s energy intensive industries, and without urgent review could see some companies leaving the UK for good, warns a report

Steel making, ceramics, paper, cement and lime manufacture, aluminium, basic inorganic chemicals and other industries currently employ some 225,000 workers, producing products essential to the UK’s low carbon economy, from steel and light weight composites for wind turbines and electric cars, to glass, ceramics and advanced insulating materials for low-energy housing.

The Cumulative Impact of Climate Change Policies on UK Energy Intensive Industries is published by the Energy-Intensive Users Group (EIUG) and the TUC and says that the forecast increase in total energy bills, taking electricity, gas and emissions reduction schemes together, could be as high as 141 per cent by 2020.

The report says that these cost increases present a major challenge to the viability of a number of named companies across different energy-intensive manufacturers in the UK – including ceramics, chemicals, steel, aluminium and paper.

Commenting on the report TUC General Secretary Brendan Barber said: “Employers and unions in these manufacturing industries are determined to make sure these companies have a future in the UK’s low carbon economy. A just transition to a greener economy is vital for these industries and the jobs of the workers they employ, and they make a significant contribution to the UK economy.”

EIUG Director Jeremy Nicholson said: “Government needs to ensure a better balance of policy on emissions reductions between the industrial, commercial, transport and domestic sectors. As green tax structures stand today, energy intensive industries are carrying a heavy burden of policies to tackle climate change and reduce energy use. Yet these companies make a significant contribution to UK GDP and exports.”

Managing Director and CEO of Tata Steel Europe, Kirby Adams said: “Many governments have determined that man-made climate change is one of the most pressing issues the world faces today. Corus can be part of the solution through relentless process improvements, investing in breakthrough technologies and supplying and developing new products that underpin a lower CO2 economy.

“Many of the taxes and costs identified in this report are UK-specific and will reduce the competitiveness of Corus’ British operations. Moreover, the very significant cumulative nature of the additional costs likely to come in under European legislation will damage the competitiveness of all EU steelmakers and limit their ability to fulfil their crucial role in a low carbon future.”

Chief Executive Officer of GrowHow, Paul Thompson, said: “The fertiliser industry has been identified by the EU’s own study to be the sector most exposed to the risk of ‘carbon leakage’. Despite our substantial recent investment to reduce greenhouse gas emissions by more than 40 per cent, the combined effect of these climate change policies will almost certainly make this a reality in the UK.”

British Ceramic Confederation President and Chief Executive of Ibstock Brick Limited, Wayne Sheppard said: “Ibstock has already invested more than £50 million in energy-efficiency improvements in the UK in the last decade. We had reduced our carbon emissions pre-recession by 18 per cent as a result. We want to invest more in the UK, but we are competing for funds from our parent company with our other plants in Europe and around the world. The UK’s climate change policies are seriously out of line with other countries’ more pragmatic approaches.”

The EIUG and the TUC both support the shift to a low carbon economy as an essential response to the acknowledged challenge of climate change, and believe the UK’s energy intensive industries are vital to this transition.

The report calls for:
· A balance of climate change policies between industry and other sectors of the UK to transform the UK to a low carbon economy.

· UK climate change policies to have accompanying impact assessments that look at the combined effect of all related policies on intensive energy users.

· The Government to undertake a full cost-benefit analysis of energy-intensive sectors to understand the direct impact on the companies and the GDP benefit to the UK and its regions.

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