Energy intensives urge government to broaden renewables cost protection


Major energy users most at risk from spiky winter energy pricesIndustry bosses have urged government to broaden its proposals to limit the impact of renewable subsidies on energy bills as it launches a consultation to try and insulate British industry from rising costs.

The plan is to take the cost from qualifying industrial firms’ bills and add it to everyone else’s. It is being achieved by adjusting energy supplier’s exposure to renewable levies in proportion to their energy intensive user-base – and suppliers passing on the costs and savings. Government predicts the tab to will equate to £5 per household bill. Businesses may find themselves paying more.

Energy Intensive Users Group director Jeremy Nicholson said the proposals were necessary to protect a beleaguered sector, but insisted the Group had never lobbied for consumers to pick up the cost. He said if green targets were not to be cut back for cost reasons, that recovery of industrial costs may be more fairly achieved through general taxation, which takes into account ability to pay.

“All our members need is a level playing field. Nobody wants British industry to be effectively protected at the expense of everybody else. But that is a government decision.” He said a preferable decision might be “getting the cost of the renewable programme down and not having unilateral carbon price support”.

However, he continued, ”instead of reining back [renewables], they have kept green targets in place and everyone is going to pay more.”

How much more is open to debate, he said, given that protection will not kick-in until April 2017.

“While we are trying to remain upbeat, given the events going on in the steel industry at the moment, whatever happens British steel is going to end up smaller at the end of it,” said Nicolson. “It may well be that some of the potential beneficiaries are no longer there. The sort of potential closures that are on the cards… represent a big chunk of money that will not be translated into the exemption. Therefore should the benefit be increased for those remaining?”

Meanwhile, Laura Cohen, chief executive of the British Ceramic Federation, said barely a handful of members may receive any protection under current proposals.

“We remain deeply concerned that there is very limited coverage of renewables compensation amongst our members. Perhaps only six companies might qualify. The consultation gives us the opportunity to press for a broadening of access to benefits more in line with that in competitor economies such as Germany and Italy where more comprehensive support is provided to other ceramic manufacturers covering a much broader range of products.”

See the consultation here.

Related stories:

Future of EU ETS is ‘single biggest risk’ facing energy intensives 

Energy intensives to be refunded policy costs, says Cameron

Major energy users say they cannot match processes to energy price spikes

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