Intensive energy users should be excluded from Government plans to boost low carbon investment, according to a U.K. business group.
U.K. Chancellor George Osborne announced in his 2011 Budget the introduction of a carbon floor price, which is due to start in April 2013.
However, according to the CBI - the Council of British Industries - the Government should exempt energy-intensive users from this scheme.
The carbon floor price will be around £16 per tonne of CO2 when the scheme start in 2013, although it will not be 100% clear until
In a new report, released on August 5, 'Protecting the UK's essentials: a blueprint for energy-intensive industries', the CBI argues the carbon floor price is making it increasingly 'uncompetitive' for the most energy-intensive users to remain in the UK,
CBI chief policy director, Katja Hall, said: 'The Government is in serious danger of throwing out the baby with the bathwater if it continues to pile new costs onto industries that are responsible for hundreds of thousands of jobs and bring in £15bn to the UK economy every year.
'Businesses accept they must share the cost of moving to a low-carbon economy, but we simply cannot afford to price out this vital sector.
'The Government must ensure its autumn energy strategy looks at ways of exempting companies most at risk from the carbon floor price, while encouraging them to be as energy efficient as possible and use new technology to reduce emissions further.'
'Unless the Government acts swiftly, there's a real risk that these companies will decide it's not cost effective to remain in the UK and simply relocate elsewhere,' the report says.
The CBI's proposals to ensure that energy-intensive industries can compete globally include:
- Working with business to assess the cumulative impact on energy-intensive industries of current and proposed energy and climate change policies
- Exempting those energy intensive industries most at risk from the carbon floor price - this offers the most immediate solution
- Using EU state aid to create a level playing field so that all member states are able to protect the competitiveness of their energy intensive industries equally
- Looking at letting conglomerates negotiate long-term power contracts with energy suppliers
- Undertaking an investigation of the industrial sectors' ability to contribute to balancing the electricity network
- Exploring ways of giving credit to energy industries for decarbonising their UK supply chains
- Working with business on private procurement standards for low-carbon products made by energy intensive industries
The CBI's proposals for support to new and existing energy efficient technologies include developing:
- Roadmaps to show how different sectors can de-carbonise
- New plans to support combined heat and power
- A carbon capture and storage strategy for energy-intensive industries
- Financial support for industrial efficiency programmes from the Green Investment Bank
- Low-carbon heat and bio-energy strategies which include using waste heat and take energy intensive industries into account
- Address barriers to better waste management for energy intensive industries.