Paper firm calls on Government to stand up for industry

Bolton, UK - Medical pulp manufacturer Vernacare is calling on the Government to modify planned changes to the European Union’s Carbon Emission Trading Scheme (EU ETS) which it believes could seriously threaten the future of paper companies, as well as other industries.

Vernacare, which employs 200 people at its Bolton factory in Greater Manchester, uses recycled paper to manufacture single-use pulp bedpans, urinal bottles, washbowls and other products, which prevent infection in hospitals around the world. But the company says these and other jobs in the UK could be at risk if plans to end ‘free allowances’ under EU ETS are implemented in five years time.

Under the current phase of EU ETS energy intensive companies across Europe are allocated free carbon emissions allowances – usually capped to an amount of units below their actual CO2 emissions. This cap drives emission reduction through financial penalty and incentive, as those companies emitting more CO2 than their allocation must purchase additional allowances to match their emissions, whereas those who under-use their annual allowance may trade them on the open market, or carry them over for future years.

There are now government backed plans to progressively phase out free allocations from 2013 to 2020 – meaning that Europe’s energy intensive industries, such as paper and steel makers, will have to purchase all their units and pay for every tonne of CO2 they emit. At the current price of €25 per unit this would mean an additional cost to the UK paper industry in excess of £100 million every year - more than the total annual profits of the entire sector.

Furthermore, allowance prices are set to rise substantially, and on the back of spiralling energy prices, which have risen by more than 100% in the past 12 months alone, the proposals could be even more damaging 

“The existing capped system of free allowances is reducing emissions year-on-year in an efficient and cost effective manner and it is working, according to Karen Haslam, chief executive of Vernacare, which has achieved various environmental accreditations, including ISO 14001.

"We are a socially responsible business and are taking every possible step to reduce our carbon footprint," commented Haslam. This, she said, has included reducing its gas consumption by 19.4% in the last two years, gradually replacing existing plant with more energy efficient technologies, using thermal imaging to address any leakage of heat from our ovens, and looking at renewable energy options such as wind and solar power.

 “But an energy intensive business like Vernacare will inevitably be affected by changes to the EU ETS. The government intends companies to pass on this ‘tax’ to customers, but our customers, including the NHS, simply won’t be able to accept increased prices,” Haslam insisted. 

She added: “Because the EU ETS only covers Europe, businesses, like ours, which face stiff competition from companies outside the EU and export worldwide, would not be able to compete effectively in the global marketplace. We also fear that it would drive UK paper recycling companies out of business and then we may be faced with the environmentally unfriendly prospect of sourcing our raw materials from overseas.”