Energy-intensive industries can shape £250m scheme
13 Mar 2012
London – Businesses impacted by rising energy prices are being invited to provide information and data that will shape a £250-million Government scheme aimed at alleviating their electricity bills.
The UK government has issued a call for evidence in support of the Energy Intensive Industries (EII) Package. The programme aims to reduce the impact of energy and climate change policies on the cost of electricity for those energy intensive industries whose international competitiveness is most affected by them.
Government estimates predict that energy and climate change policies may add up to 28% in 2020 on average electricity prices paid by large energy intensive users. Industry estimates that the likely hit will be two to three times higher than this.
According industry’s Energy Intensive Users Group (EIUG), energy can represent 20-70% of total production costs in industries such as steel, paper, cement, lime, aluminium, inorganic chemicals, glass, ceramics and industrial gases.
Manufacturers, therefore, depend on access to internationally competitive energy supplies to survive in the global market, argues EIUG.
“The Government is committed to ensuring that manufacturing is able to remain competitive during the shift to a low carbon economy,” said Vince Cable, business secretary. “The measures proposed in our EII Package will offer crucial support to energy intensive industries.”
Energy and climate change secretary Edward Davey said: “As we manage the transition to a cleaner energy mix, it’s important that we are alive to adverse impacts felt by energy intensive industries which face tough competition overseas.
“The evidence we are calling for today will help us to target the financial support we have available to those businesses that need it most.”
Through the EII Package, £250 million of direct financial assistance will be targeted to the most energy-intensive businesses whose competitiveness may be affected.
The call for evidence asks companies and trade bodies to share information and data about their energy-intensity in order to help Government target compensation effectively.
Once sufficient data is gathered, the Government will formulate policy, consulting in September this year, for implementation in Spring 2013, subject to state aid rules.
Industrial energy users have warned that UK plans to act unilaterally in taxing carbon emissions from power generation will render UK electricity supplies increasingly uncompetitive.
According to the EIUG, plans outlined in last year’s Budget will see UK energy consumers facing double the carbon costs of European competitors’. The moves, it argues, will also push production and jobs overseas, and just shifting the emissions problems elsewhere – see EIUG report on cumulative impact of low-carbon policies on energy costs.
