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Green Energy Bill May Drive Paper Industry Abroad

Resource News

The Confederation of Paper Industries (CPI) has expressed ‘concern’ that the government’s upcoming policies on energy, carbon and environment could make certain energies in the UK so expensive that it would drive Energy Intensive Industries (EIIs), such as paper, out of the country.

David Workman, Director General of CPI has now written to the Chancellor of the Exchequer, George Osborne, warning that the ‘cumulative effects’ of policies aimed at reducing carbon emissions could increase the cost of the paper manufacturing industry by several hundred millions of pounds between 2013 and 2020. According to Workman, the industry currently has an annual turnover of £5 billion and employs directly and indirectly about 100,000 people.

Writing ‘on behalf of the UK’s paper-based industries’, Workman said that the Chancellor’s forthcoming Autumn Statement (scheduled for 5 December) will be an important forum to address some of these concerns. This is because 2013 marks the introduction of several carbon cutting policies including the EU Emissions Trading System, the introduction of the Carbon Price Floor and ‘new and challenging’ Climate Change Agreement targets.

‘CPI recognises that the coalition government has enacted a number of measures over the last two and a half years to help mitigate the effects of achieving the UK’s highly ambitious carbon reduction and renewable targets. The £250 million support package for EIIs announced in the 2011 Autumn Statement was a welcome measure, but a drop in the ocean of what is needed to offset the cumulative cost impact of government policy’, wrote Workman.

Identifying that UK paper mills now use 42 per cent (1.6 million tonnes) less fossil fuel to make each tonne of paper than they did in 1990 (as quoted in the DECC review of Climate Change Agreements (2011)), Workman said that the industry has ‘done [its] bit’ and it is now the turn of government to ‘mitigate the effects’ of achieving UK carbon reduction and renewable targets.

He acknowledged that though papermaking is an ‘intrinsically energy intensive process’, UK manufacturers need internationally-favourable energy prices to remain competitive and to continue to attract inward investment.

‘An example of misguided policy is the forthcoming Carbon Price Floor (CPF), through which the cost of electricity in the UK will be inflated as additional taxation is applied to fossil fuels when used to generate electricity. This is presented as a green measure, but fails in two key areas.

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