The Department for Business, Energy & Industrial Strategy (BEIS) launched a fresh consultation earlier this month regarding a support scheme that would help EII firms including paper, steel, glass, ceramics and cement.
The consultation involves the option to increase the level of exemption for certain environmental and policy costs from 85% of costs up to 100%.
“This reflects higher UK industrial electricity prices than those of other countries including in Europe, which could hamper investment, competition and commercial viability for hundreds of businesses in industries including steel, paper, glass, ceramics, and cement, and risk them relocating from the UK,” BEIS stated.
Andrew Large, director general of the Confederation of Paper Industries, told Printweek: “CPI welcomes this consultation as a key element in the government’s implementation of the British Energy Security Strategy. The consultation clearly sets out the uncompetitive price of UK industrial electricity and shows just how essential it is to extend the energy intensive industries exemption scheme.
“CPI urges the government to implement the proposed 100% exemption level as quickly as possible, to reassert UK competitiveness and prevent the further leakage of investment to countries with lower climate ambitions and lower energy costs.”
Back in March the CPI called on the government to “match the rhetoric of changed economic circumstances with actions” in support of the UK’s paper-based industries.
The government published its British Energy Security Strategy the following month.
The Energy Intensive Users Group (EIUG) said that while it welcomed the new proposal to increase the relief rate, which would assist certain EIIs with the indirect costs of funding renewable electricity policies, the government needed to do more — and soon.
“It will reduce the industrial electricity price differential with other countries. However, as Ofgem research indicates, the government’s proposal only closes part of the gap, highlighting the need for further action to mitigate the risk of carbon leakage and avoid the risk of putting EIIs at a competitive disadvantage internationally,” the EIUG stated.
The organisation also noted that the schemes include a business-level test, “which leads to intra-sectoral distortions and limits the eligibility of certain energy-intensive companies in eligible sectors, like ceramics”.
The EIUG urged the government to withdraw this test.
The EIUG has stated that inward investment, growth and competitiveness “have been hampered for years by UK energy costs higher than those of international competitors”.
“In some cases, investment, economic activity and jobs have relocated abroad, leading to a subsequent increase in imports.”
CPI statistics for 2021 show that the UK’s paper-based industries, including tissue, paper and board, had sales of more than £12bn and employed 56,000 across more than 1,400 companies involved with the manufacturing of paper products.
EIUG businesses overall support 210,000 jobs directly and 800,000 jobs indirectly, with a gross added value contribution of £29bn to the economy.
The review is limited to Great Britain and excludes Northern Ireland.
