Today's Autumn Statement has confirmed that EEF has secured some major policy wins on:
- The Climate Change Levy rebate on electricity for CCA companies will increase to 90% with effect from April 2013.
- A further £100 million will be made available via the Green Investment Bank to finance energy efficiency investments in the commercial and industrial sectors.
- The government will provide compensation for the indirect costs of the Carbon Price Floor tax on electro-intensive industries, with effect from 2013. The Treasury will make up to £100 million available for this. Early next year, the government will consult on the precise eligibility criteria – this is likely to be based on companies' electricity purchases as a percentage of gross value added, with a view of staying within the £100 million budget. This will be subject to EU state aid approval.
- The government will provide compensation for EU ETS indirect emissions pass-through costs in line with the Commission's eventual state aid guidelines with effect from 1 January 2013. This is of direct interest to UK steelmakers. In terms of eligibility, this goes further than we had hoped. The cost will be up to £110 million, which BIS and DECC will jointly find from existing budgets. The scheme will be administered by BIS.
Today's announcement is welcomed. It appears that the government has recognised the need to shield globally-competitive industries based in the UK from unilateral cost increases resulting from climate change policy. At EEF we have been urging the government to seek a global response to climate change and have long argued that unilateral action risks just off shoring emissions from energy intensive industries, such as steel, whose products are vital inputs into low-carbon technology supply chains. The fact remains that if the costs of climate policies make UK-produced steel too expensive to compete, people will just buy it from somewhere cheaper, where there is less climate-related constraints on production. For globally-competitive products, a truly global response is required.
Nevertheless, these commitments are firm only to the period relating to the current spending review – so through to March 2015. Government must build on this by sending a signal to companies looking to invest here that it will maintain this package beyond 2015.
We will of course continue to lobby government for a reform of the climate change policy landscape. The next phase of our efforts will be on the back of the publication of our next report on Green and Growth in mid-December which formally launch EEF's recommendations for reconciling the Government's two seemingly incompatible priorities of rebalancing the economy and being the greenest government ever. EEF believes that this is a false choice, and our recommendations will set out an alternative route to secure both goals.