Skip to content

Chemical Industry Threatens To Exit Britain Over Carbon Floor Price

High energy costs have emerged as the top concern of British chemical and pharmaceutical companies, according to the sector’s main trade association.

In its latest quarterly survey of business confidence, the Chemical Industries Association said energy costs were easily the biggest problem its members faced, ahead of the regulatory climate and employers’ additional social costs.

Energy costs have been creeping up as North Sea gas production dwindles and Britain becomes increasingly dependent on imports. The wholesale cost of natural gas has risen from £280 per customer per year in April 2010 to £400 in April 2012, and electricity prices have also increased.

That has hit energy-intensive companies, such as Ineos, the chemicals group, whose Merseyside chlorine plant uses nearly as much electricity in a day as the city of Liverpool.

Green policies such as the introduction of a carbon price floor – designed to encourage low-carbon forms of electricity generation, including nuclear power – have also hit the industry.

The CBI employers’ group and the EEF, which represents manufacturers, have given warning of the huge cost to business from such policies.

Last November, the government offered compensation to heavy energy users to mitigate the effects of the carbon price floor and the EU emissions trading system on electricity costs.

But the Chemical Industries Association said it was not enough.“They’ve got to shield the industry, or it will just go elsewhere,” said Alan Eastwood, the association’s economics adviser.

Financial Times, 1 May 2012