Government's low-carbon policies pose jobs threat for food and drink sector
More than a quarter of UK food and drink manufacturers could cut jobs and freeze recruitment thanks to rising energy costs, according to an Npower poll.
The energy provider surveyed 100 decision-makers in the food and drink industry, to find out how they planned to deal with the costs of the Electricity Market Reform (EMR), which will appear on energy bills of large consumers for the first time in April.
While 26% of decision makers said they have planned cuts to employment, 16% had also considered moving their production offshore.
Keep the lights on
The EMR is the Government policy to 'keep the lights on' and speed the transition to low carbon electricity generation. Its two main elements are the Contracts for Difference (CfDs) and Capacity Mechanism (CM), and it is the cost of these that will be appearing on energy bills this month.
Although the impact will be minimal at first (£0.4/MWh), costs will ramp up on a quarterly basis, with Decc claiming that large energy users' bills could increase by £8 to £10 per MWh by 2020. Decc has estimated that by 2020 this additional amount represents increased electricity charges of about 10%.
However, the Npower survey also revealed that 38% of businesses polled felt that they have had too little warning or explanation of the impending new charges on their bills. "These figures indicate a clear level of industry-wide dissatisfaction," said Npower.
Head of climate change & energy policy at the Food and Drink Federation, Stephen Reeson, said the industry was becoming increasingly concerned with energy bills.
"Ultimately it is consumers who will feel the impact in their weekly shopping basket if companies are unable to keep absorbing these costs," she said. "But rising energy prices will also substantially impact our sector's ability to fund low carbon technologies and grow exports in highly competitive global markets."
Decc was contacted for a response to the survey but said it was unable to comment in the pre-election period.
Wayne Mitchell, the director of markets and innovation for Npower Business Solutions, said that the Government and businesses were underestimating the impact of rising energy prices on corporates in every sector.
"Cut backs and carbon leakage are a concern for UK plc; not only do we risk losing productive, viable businesses but the overall objective of reducing carbon emissions could be lost as well," he said.
"Government and energy suppliers must do more to engage businesses about the impact of energy policy. We should be doing everything we can to help them mitigate the risk of rising prices, maintain their competitiveness, and even turn energy into a commercial opportunity where possible."
Energy costs at sustainability Live 2015
Energy costs will be discussed in detail at Sustainability Live 2015 in April. A specific session titled ‘Financing energy saving programmes and understanding the business case’, taking place at Energy Efficiency Theatre One on 21 April, will explore financing options to help put cost-saving energy efficiency strategies in place, from leases and loans to energy performance contracting.