Chancellor Announces GBP 7 Billion Package to Cut Energy Bills for UK Manufacturers

Chancellor George Osborne announced a £7 billion package to cut energy bills, including £18 per ton cap on carbon price support, predicted to save medium-sized manufacturers £50,000 per year.

March 19, 2014 (Press Release) - The Confederation of Paper Industries (CPI) welcomes the Chancellor's [George Osborne] announcement in today’s budget of a seven billion pound package to cut energy bills for British manufacturers.

The UK Paper Industry competes on a global basis and energy prices form a significant proportion of the sector’s operating costs. It is difficult to compete effectively with areas of the world such as the USA, and indeed other EU countries, where energy prices are significantly lower than here.

We particularly welcome the Chancellor’s recognition of the impact of high energy prices on industry, and the paper sector in particular, and his acceptance that competitive energy prices are key to retaining UK jobs.

Recent government policy initiatives, such as the carbon price floor (CPF), have helped to make UK energy prices uncompetitive and CPI is pleased that the Government is now making policy changes to address the issue.

In particular, we welcome the Chancellor’s announcements of:

  • the intention to freeze Carbon Price Support (CPS) levels from 2016-17;
  • the extension of the EU Emissions Trading System electricity price and CPF compensation schemes for Energy Intensive Industries to 2019-20;
  • the introduction of a new compensation scheme to help offset the costs of renewable electricity in 2016-17;
  • the removal of CPS from electricity produced by Combined Heat and Power (CHP) plants and used for industrial consumption, and
  • the offer of increased tax-related support for industrial investments.

CPI’s Director General, David Workman, commented: “CPI has been calling for these policy changes, in particular the removal of CPS taxes from industrial electricity generated by good quality CHP plants. I am delighted the Chancellor has listened to our arguments and acted. Paper mill CHP plants are energy efficient and contribute to reducing the country’s greenhouse gas emissions and the policy change recognises this fact.”

He added, “Taken as a whole, the Chancellor’s package to help reduce energy costs for manufacturing industry is excellent news, and will help to keep skilled jobs in the UK and encourage investment in UK manufacturing. The Chancellor has shown in this statement that he has been listening and I would thank him for specifically mentioning the Paper Industry in his speech. He promised a budget in support of manufacturing and he has delivered.”

CPI is the voice and face of the UK's Paper and Paper-Based Industries, representing recovered paper merchants, paper and board manufacturers and converters, corrugated packaging producers and tissue makers. CPI represents 70 Member Companies, with a combined annual turnover of £5 billion and 25,000 direct and more than 100,000 indirect employees. To learn more about CPI, please visit: www.paper.org.uk.

SOURCE: The Confederation of Paper Industries (CPI)