By Daniel Hunter

Britain’s manufacturers are calling on the government to build on recent progress by implementing a full review of it’s climate change taxation and regulation policy ahead of the next Spending Review.

It also needs to take steps to ensure that its Energy Bill takes the most cost effectiveness to developing the next generation of low carbon energy.

The call was made by EEF, the manufacturers’ organisation on the back of an assessment six months on from the publication of its own proposals, ‘Green and Growth: Solutions for Growing a Green Economy’. The analysis also comes ahead of forthcoming decisions on the Carbon Reduction Commitment and Electricity Market Reforms. Its approach to both these issues will be a litmus test of how effectively government policy is achieving its Green and Growth ambitions.

“Britain faces major challenge to de-carbonise our economy and strengthen economic growth. But achieving its Green and Growth ambitions will only be possible if it takes a more cost effective approach. Climate change policies add 20% to electricity prices for business, rising to nearly half by 2030.and the government’s Energy Bill must address this," Commenting, EEF Chief Executive, Terry Scuoler, said.

“We also need a simpler and more coherent approach to climate change with a full review of the current set of tax and regulation measures, starting with reforms to the Carbon Reduction Commitment.”

EEF’s analysis suggests there has been some positive progress in a number of areas including:

· Evidence of a more cost effective and balanced approach including the introduction of feed-in tariffs, a greater focus on developing a gas generation strategy, continuing efforts to encourage investment in nuclear power and signs of support for a 2030 Energy Decarbonisation target —
· Attempts to simplify the Carbon Reduction Commitment
· Recognition by the Committee on Climate Change of the need to focus on developing global agreements to reduce carbon emissions in sectors such as steel where international competition is fierce and where collaboration between companies is vital to achieving progress
· Widening the remit of the Green Investment Bank to include industrial energy efficiency and waste
· Quickly launching a new competition for multiple demonstrators for carbon capture and storage that includes coal and gas
· Developing a new approach to public procurement with government working more closely with potential UK suppliers to help them realise the opportunities.

But EEF warned that the government needs to redouble its efforts to improve the cost effectiveness of its climate change policies with the government own estimates showing that they currently add 20% to electricity prices for business, with this rising to a third by 2020 and just under half by 2030.

EEF is therefore calling for the government to ensure that its Energy Bill
· Includes stronger statutory safeguards to control the costs of the new Feed-in Tariffs
· Sets a target of introducing technology neutral-auctions for low carbon energy by 2020 rather than its current aspirations for the mid 2020s. .
· Take further steps to reduce the exposure of energy-intensive industries to higher electricity prices.

It also needs to take steps to maximise he number of manufacturers are able to take part in climate change agreements - the best mechanism for them to reduce carbon emissions — rather than the bureaucratic Carbon Reduction Commitment.

EEF will be publishing a major survey of manufacturer’s view on Climate & Environment policy at the end of July.

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