Energy Bill: When the chips are down
31 May 2012
Well done to the UK’s chip shop owners, who have managed to fight off a tax hike on hot takeaway food. This reversal of government fiscal policy is something that years of lobbying by the process sector has so far failed to deliver – judging by the proposals in the draft Energy Bill.
The UK is set to lose at least 20GW of its 75GW power generation capacity by 2015, as coal-fired power stations are required to shut under emissions regulations and most nuclear plants exceed their use-by date.
With the Energy Bill, the government hopes to plug the power gap by attracting £110 billion of investment, mainly in new gas-fired and nuclear plants as well as in wind, solar and wave power.
It is worth remembering that just of few months ago, people were struggling with sub-zero temperatures, fuel shortages and gas price hikes. That most were able to keep their homes warm and lit, and factories to keep running was largely down to coal, which over last winter generated 45% to 50% of the UK’s electricity - as gas prices shot up across Europe, and wind-power failed to deliver.
While there is still some scope for review, the government’s energy proposals largely ignore industry concerns about our future energy security – particularly those voiced by energy-intensive sectors, such as metals, chemicals and pulp & paper- that are to bear much of the cost of establishing new power capacity.
Government estimates show that the UK’s energy-intensive industries are already paying 17-24% more than their competitors in countries, such as France, Germany and Sweden, where there are also significantly higher discounts on energy taxes.
Calling for a halt to the spiral of “crippling costs,” Steve Elliot, chief executive of the Chemical Industries Association, said UK manufacturing needed help and support to deliver the government’s targets for transition to a ‘low-carbon’ economy.
“I am afraid this Bill … will yet again heap more cost on to business,” said Elliot. “In a globally competitive market, I worry that companies will have further reason to move investment away from the UK.”
Hopefully, the government will start to take these arguments on board now that the the chips are down.
