Some of Britain’s biggest companies may be forced to move to the US or Eastern Europe, where energy costs are dramatically lower, the Energy Intensive Users Group is warning this weekend.
Jeremy Nicholson, director of the powerful lobby group that campaigns for companies in the steel, chemical and glass industries, said that British companies could not compete against US groups because their energy costs were four times cheaper.
He said Britain needed to develop its own shale gas industry, which would decisively transform the economics of the intensive energy industry. Britain should also pay compensation to firms that face huge bills to meet climate change targets, he added.
“The solution for intensive industry depends on maximising the opportunity for responsible production of shale gas in the UK as well as completing the electricity market reform process so the UK can deliver low carbon nuclear energy and renewables at least cost to consumers,” he said.
He added that the Government and intensive-energy industries had to reach a deal that would give compensation to firms forced to pay for higher-price energy to meet climate change policies.
Germany’s biggest companies have also warned of an inability to compete with the US because they do not have access to the same quantity of cheap shale gas.
They believe the US will have a price advantage for at least the next seven years.
German industrial giant BASF has said European companies were paying up to five times more than American competitors. As a result, European energy-intensive users may invest more in the US rather than in Europe.
The warning comes as the Government looks set to announce that Britain has discovered huge shale gas deposits in the North-West, East Midlands, Sussex and Kent. The Mail on Sunday revealed last week that Britain was sitting on shale gas reserves worth pounds sterling 1.5 trillion.
The amount — more than the remaining gas reserves of the North Sea — is bigger than previously thought and would potentially bring energy price stability and independence from imports for decades.
Nicholson said: “It’s inevitable that our members will have to think about moving if energy prices keep going up so fast and our competitors have the advantage of gas three to four times cheaper.”
He said Britain had an opportunity to compete because of the discovery of large quantities of shale gas — and much of this was in areas where our biggest energy producers had major facilities.
“We are well placed to exploit shale gas here,” he said.
“The environmental agency is a very responsible agency and it would not get in the way of responsible development.”