By Max Clarke

The Government needs to act swiftly to ensure the global competitiveness of the UK’s most energy-intensive manufacturers is not undermined by rising costs and climate change and energy policies, the CBI has said.

In a new report Protecting the UK’s foundations: a blueprint for energy-intensive industries, the UK’s leading business group argues that these companies form a crucial part of the manufacturing and supply chain and will play a key role in tackling climate change. Energy-intensive companies also employ 225,000 people in the UK and account for one percent of annual GDP (£15bn).

But the carbon floor price is making it increasingly uncompetitive for the most energy-intensive users to remain in the UK, and the CBI is calling on the Government to consider exempting these firms from the tax.

Energy intensive industries underpin the UK’s manufacturing sector, making products as diverse as the steel and chemicals needed for wind turbines and low-rolling resistance tyres,” said Katja Hall, CBI Chief Policy Director.

“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 that 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.”

Join us on
Follow @freshbusiness