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Britain’s £800m cement industry threatened by carbon reduction policies

Government should scrap plans for carbon price floor, exempt all energy-intensive industries from the climate change levy to the maximum extent permitted under EU directives, and abandon unachievable target of generating 20 per cent of electricity by renewable methods by 2020.

 

A new pamphlet by Kaveh Pourvand examining the £400bn a year mineral products industry, warns that has the highest carbon reduction targets in Europe , and that this is causing great damage to manufacturing.

 

Published by Westminster think-tank Civitas, Mr Pourvand’s pamphlet argues that the mineral products sector, which employs 70,000 people, is crucial to the economy. However, manufacturing is under threat from high energy prices, especially energy intensive industries (EIIs).

 

EU legislation already adds “considerable costs” to energy prices. However, the ’s current environmental strategy raises energy prices to high levels, even in comparison to the rest of the EU.

 

Unlike other countries with ambitious carbon reduction targets, the does not currently legislate to protect key industries. For example:

 

“ which also has ambitious emissions reduction targets but is careful to protect its EIIs with significant concessions on energy costs, estimated to be €9bn in 2011.”

 

The pamphlet advocates scrapping the Carbon Price Floor (CPF), the amounts companies will have to pay per tonne of carbon dioxide they emit, which is intended to come in in April 2013.

 

The CPF is unique to the , but the total amount of carbon emissions is set across the whole of the EU by selling carbon permits known as EUAs. The obvious flaw is that if reduces its carbon emissions, the same net amount of carbon emissions are permitted across the EU anyway:

 

“…if British firms are dis-incentivised from purchasing EUAs, they would merely be left on the market for other European firms not subject to the CPF.”

 

Another damaging policy is ’s Renewables Obligation (RO) which requires energy companies to purchase a minimum amount of expensive renewable-source energy.

 

ROs were introduced to help comply with EU regulations of 20 per cent of EU energy supplied by renewables by 2020. However, each country sets its own targets. Once again, has set a target which makes its manufacturing uncompetitive:

 

“ has committed itself to the biggest renewables increase in the EU of nearly 14 per cent (from 1.3 per cent in 2005 to 15 per cent in 2020).”

 

The UK Government has set aside a £250m relief package for 2013 to help industry, but it is, argues Mr Pourvand, “…of too small a scale to make a significant difference.” Even if it were more substantial, threatened industries, including cement, are not even eligible for the relief.

 

“Following David Cameron’s pledge to lead the ‘greenest’ government ever, the coalition has stuck firmly to the implementation and continuance of the 2008 Climate Change act, committing the UK to a unilateral cut in carbon emissions of 80 per cent by 2050 compared with 1990 levels.”

 

Mr Pourvand is clear: “There is more the government can do.” For British manufacturing to revive, the Government should abandon its expensive climate change policies.  

 

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Notes for Editors

 

Civitas: The Institute For The Study Of Civil Society, is a leading independent Westminster think tank. Their latest research includes a study of Industrial Policy entitled A strategy for economic growth: a modern industrial policy

 

Ends.

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