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Thursday 27th December 2012 | 11:42
Civitas press release
A new pamphlet by Kaveh Pourvand examining the £400bn a year mineral products industry, warns that Britain 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 UK economy. However, UK manufacturing is under threat from high energy prices, especially energy intensive industries (EIIs).
EU legislation already adds “considerable costs” to energy prices. However, the UK’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 UK does not currently legislate to protect key industries. For example:
“Germany 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 UK, 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 Britain 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 UK policy is Britain’s Renewables Obligation (RO) which requires energy companies to purchase a minimum amount of expensive renewable-source energy.
ROs were introduced to help Britain 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, Britain has set a target which makes its manufacturing uncompetitive:
“Britain 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.