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NECC's carbon fears.

Byline: JEZ DAVISON

ELECTRICITY market reforms must not damage the competitiveness of Teesside manufacturers, leading business lobby groups have warned.

The Government has announced a range of measures designed to clean up Britain's carbon footprint and secure energy supplies for the future.

They include an Emissions Performance Standard to encourage carbon capture and storage technology in coal-fired power stations.

Meanwhile a carbon price floor, which will put a minimum price on carbon use from 2013, is designed to boost investment in renewable energy.

But the CPF will impose financial penalties on firms that emit large volumes of carbon - a move that will hurt energy intensive manufacturers in Teesside's process industry.

The North East Chamber of Commerce (NECC) has expressed concern that the CPF will make it more expensive for local manufacturers to produce their goods.

Mark Stephenson, North-east policy advisor at the NECC, said: "The Government is to be applauded for taking action to help decrease levels of investor uncertainty.

However, the impact of some of these measures, in particular the carbon price floor on businesses that require high volumes of energy, is set to be hugely damaging unless the stated plans are reformed."

The CBI and manufacturers' organisation EEF have also voiced concerns about the electricity market reforms and the CPF in particular.

The CBI said the measure was penalising firms which were improving the environmental footprint.

Sarah Green, director of CBI North East, said: "A wide variety of chemicals are needed for everyday products such as insulation, detergents, cars and aeroplanes. "It's estimated that the use of these materials saves more than twice the amount of CO produced during their manufacture."

Meanwhile, EEF said firms did not need an extra cost burden when they were already grappling with high inflation, which has ramped up their production costs.

Tony Sarginson, EEF North-east regional manager, said: "The rises in the price of plastics, fuel, energy and steel have been intense - and have been for a considerable time.

"The CPF will act as a disincentive for investment - it's an unwelcome tax."

Earlier this year a consortia of firms, including petrochemical giant Sabic, Lucite International and GrowHow, said the CPF would make them less competitive than firms in other countries.

The CPF will start at pounds 16 a tonne in 2013 and rise to pounds 30 by 2020.

It comes on top of other levies imposed by the European Union. * For more on the electricity market reforms, see the Sarah Green interview in today's business supplement.

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ON SITE:Sarah Green of the CBI at the Sabic plant at Wilton International. Picture, Doug Moody
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Title Annotation:Business
Publication:Evening Gazette (Middlesbrough, England)
Date:Aug 9, 2011
Words:433
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