July 13, 2012
U.K.

Green costs ‘may drive factories out of UK’

Tim Webb | The Times | www.thetimes.co.uk 13 July 2012

Soaring green energy charges will make British industry uncompetitive compared with other leading countries by the end of the decade.

A study by the Government’s Department for Business found that electricity prices for manufacturers and other major energy users are set to rise as a result of tighter environmental regulations and taxes.

The study shows that the increase in costs will far outstrip those faced by industrial companies in other leading European Union countries that are pursuing a less ambitious green agenda.

Manufacturers said that the findings were “extremely worrying”, and warned that factories in Britain could be moved overseas, where environmental regulations were weaker and energy prices lower.

According to the report being published today, the new charges will add another £28 per megawatt-hour (mWh) to the existing price of electricity paid by British industry of just under £70 per mWh. Prices will rise by £17 per mWh in Germany and by £15 per mWh in France as a result of their governments’ green charges. Prices outside the European Union will rise by even less, with costs going up by £1 per mWh in India and £10 per mWh in China, while they will fall slightly in the United States.

Ian Rodgers, director of UK Steel, said: “However you cut this report, the findings paint an extremely worrying picture for the UK’s steel industry, from now to 2020. The fact is that we are operating in a global marketplace but operating under different economic rules.

“The ability to pass on the cost of energy and carbon is limited for those sectors which compete in fiercely globally competitive markets such as steel. EEF [the manufacturers’ trade body] has warned that, unabated, this could lead to ‘carbon leakage’, where production and investment is shifted to regions without carbon controls and where manufacturing costs are therefore cheaper.”

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