UK Chancellor George Osborne has today delivered his Budget Statement to Parliament, setting out how the government will take further action to secure the recovery and build a resilient economy.

Among the disclosures from the 2014 budget, the government has announced measures to reduce energy costs to ensure that the UK remains a competitive location for manufacturing.

With the acknowledgement that UK energy intensive industries (EIIs) pay up to 50% more for their electricity than in competitor economies, the Energy Intensive Users Group (EIUG) has welcomed news of action on energy costs.

The Government has previously announced a package of measures partially addressing the risk of damage to industrial competitiveness, providing compensation to EIIs for the indirect impact on electricity prices of the EU Emissions Trading Scheme (EU ETS) and the UK-only Carbon Price Floor, and exemption from the future impact of Contracts for Difference to support low carbon power generation.

The further announcement as part of the 2014 budget addresses the missing elements of this package – protection against perpetually rising unilateral carbon prices, and compensation for the impact of existing renewable subsidies such as the Renewables Obligation and Feed in Tariff for small scale renewables.

Commenting on the news, EIUG Director Jeremy Nicholson said, “These reforms will ease the pressure on Britain’s energy intensive industries. Unilateral measures like the Carbon Price Floor simply damage competitiveness for no environmental benefit. Compensation for the impact of the Renewables Obligation will help level the playing field for British industries with respect to their European competitors.” 

Reaction

UK Steel has also welcomed the announcement, though expressing disappointment at what it perceives to be a lack of urgency. Referring to the decision to provide further support for energy intensive industries from 2016/17, Ian Rodgers, Director of UK Steel, said, “While we are pleased that the Chancellor has recognised the crippling effect that the cost of the Renewables Obligation and Feed in Tariffs has on the steel sector, we are disappointed that he has failed to realise the urgency of the situation.”

“The Renewables Obligation and Feed in Tariffs is equivalent to 22% of wholesale prices, rising to 27% next month. The steel industry needs help with this burden now, not in two years’ time.”

But the news has been met with distinctly disappointed reactions from both the Renewable Energy Association (REA) and renewable energy company UFW, among others. The latter believes that the Chancellor has failed to address the ‘environmental economy’ in today’s budget and finds it “disappointing that the government has not done more to address one of most significant issues facing the global economy: global warming.”

Meanwhile, the REA claims that the policies do not match the green rhetoric and risk undermining investment in renewables by freezing the Carbon Price Floor.

REA Chief Executive Dr Nina Skorupska explained, “We welcome the Chancellor’s acknowledgement that the way to bring down energy costs over the long-term is to invest in home-grown energy sources, including renewables, as well as energy efficiency. The budget’s acknowledgement of a need to ‘reform and strengthen’ the EU Emissions Trading System is also welcome.”

“But the new, short-term measures announced today in the energy sector do not reflect this ambition – and there is much more in this budget to please fossil fuel companies than the green economy.”

 

Industrial gases and carbon compliance

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Coming up in the Green Issue of gasworld magazine…

Emissions and energy efficiency are in focus as gasworld explores carbon compliance in the energy intensive gases industry.

Learn more about carbon reporting schemes, energy efficiency, and why the clock is beginning to tick on carbon compliance in various regions of the global gases industry.