Today both DECC & HM Treasury published energy market reform, CCL and Carbon Price proposals in two separate consultation documents. As you can see below, our media release sees these proposals as a mixed bag. Whilst the energy market reforms should now provide new nuclear and low carbon investors with a stronger and predictable carbon price, the “Carbon Price Floor” Consultation from Treasury seems to add yet another layer of costs onto UK manufactures. We therefore may see a ready UK market that overseas competitors can take full advantage from:
Energy reforms are mixed bag - EEF
Electricity market reforms to provide certainty and signal to investors but carbon price mechanism to increase costs and threaten industrial competitiveness
EEF, the manufacturers’ organisation has given a mixed response to today’s package of energy reforms.
Whilst it believes the electricity market reforms will provide a more predictable and cost effective approach to supporting low carbon energy, proposals for the carbon price support mechanism will increase the costs to manufacturers and threaten the ability of companies to invest for growth.
Commenting, EEF Director of Policy, Steve Radley, said:
“Today’s reforms are likely to prove counter-productive. On the one hand government has provided a more predictable and cost effective approach to energy policy which should benefit both investors and consumers.
“It has also fired the starting gun for a policy that will prove the right market signal for investment in low carbon power generation to provide long term energy security.
“However, these reforms come at a significant price for UK manufacturers, including those who want to invest in low carbon technologies. The government’s own impact assessment shows the carbon price reforms will damage competitiveness for over a decade but it offers no solutions that will mitigate this.
“Manufacturers will have to bear the costs and complexities of three different types of carbon and energy taxation (1). Government must now address how it plans to address the loss in competitiveness by working with industry to reform other aspects of climate policy such as the Carbon Reduction Commitment and Climate Change Levy.”
Notes to Editors
1.The three types of carbon and energy taxation are:
· Climate Change Levy
· Carbon Reduction Commitment
· Carbon Support Price Mechanism (as proposed)
2. EEF, the manufacturers’ organisation is the representative body for UK manufacturing. The EEF has a growing membership of almost 6,000 companies of all sizes, employing some 900,000 people from every sector of engineering, manufacturing, engineering construction and technology-based industries.