The Paper Federation said MPs proposals for combined heat and power (CHP) were flawed and way off the mark for meeting goals set for 2010.

It called for grants to support investment in CHP, in a written response to Labours consultation on CHP.

The Federation demanded the payment of premiums for CHP-produced electricity sold by paper mills to the generating firms.

Its unlikely we will hit targets unless something dramatic is done, said Graham Barnard, director of business affairs.

Problems stemmed from the shaky economy, he said. Government proposals were based on the five years to 2000, a time of optimism.

But gas prices have gone up and electricity down, so equations for self generation of electricity have changed.

The Federation also called for a full climate change levy exemption for CHP plants, and laws to break European state monopolies of gas.

Story by Jez Abbott