The Confederation of Paper Industries (CPI) has welcomed the recent announcement by Secretary of State Ed Davey that Energy Intensive Industries (EIIs) are to be exempt from ‘contracts of difference’ costs.
Commenting on the Energy Bill announcement on 30 November, David Workman, CPI Director General said “This is further evidence that the Government understands the potential damage that climate change measures could make to the competitiveness of the vitally important EIIs”.
Mr Workman went on to highlight two critical areas of concern:
“Firstly, this is a very crowded regulatory area with numerous other measures which will increase costs for EIIs – so we are not out of the woods yet. The fact that we are still at ‘consultation stage’ on so many elements of the package, also means that we still lack certainty about future energy and carbon costs. Even at this late stage, CPI calls upon Government to rethink its proposals for a Carbon Price Floor – this single measure alone has the potential to severely damage our competitiveness.
“Secondly, we fear that because Government has hesitated on energy policy for over a decade, we will not have enough generation capacity to meet demand over the next few years, when a number of UK power stations will be forced to close in order to meet EU decarbonisation targets. We need a radical rethink on the timing of implementing these changes to our energy mix.
“The paper industry can play a major part in improving energy efficiency by installing and operating on-site Combined Heat and Power (CHP) plants. We would therefore call upon Government to introduce generous capital allowances for their construction and to fully exempt output from all energy and carbon taxes.”