Scrapping carbon price floor would ‘level the playing field’, manufacturers claim

EXCLUSIVE: Clearer policy amendments, including the scrapping of the carbon price floor, would prove instrumental in securing the long-term stability of Britain's energy-intensive companies, the manufacturer's organisation EEF has claimed.

EEF’s head of climate, energy and environment policy Claire Jakobsson has called on the Government to develop a “level playing field” for manufacturers, claiming that the Conservatives are  ”moving the goalposts”’ too often when it comes to energy policy.

Speaking to edie ahead of her appearance in a green policy-focussed session at edie live next month (scroll down for details), Jakobsson said: “We engaged with the Treasury in the build-up to the 2016 Budget and we got what we hoped for when they scrapped the Carbon Reporting Commitment, which wasn’t offering anything to businesses.

“However, to go one step further, we would like to have seen a complete scrapping of the carbon price floor, which is a business-unfriendly concept in terms of international competitiveness.”

Introduced in 2013, the carbon price floor was designed to set a minimum price, related to emissions from fossil fuels, which would rise annually and encourage manufacturers to switch to greener fuels. The floor rose from £9.54 to £18.08 last year and, although the Government has agreed to freeze the price up until at least 2020, it is still a far cry from the European valuation of £4 per tonne of carbon.

“Sparking a change in this is a slow process and if the pricing was removed it would relinquish a whole layer of exposure and pressure on the industry,” Jakobsson said. “But the treasury gets around £1bn from the initiative and this would have to be made up elsewhere if it were scrapped.”

Moving the goalposts

Through open dialogue with the Government, the EEF was successful in encouraging the Government to reduce the burden on businesses when it comes to carbon reporting, after Chancellor George Osborne confirmed that the Carbon Reporting Commitment will be scrapped. Jakobsson believes this announcement has provided manufacturers with an opportunity to lead from the front, in order to remove future regulatory implications.

“Businesses now have the chance to lead the way without a mandatory and heavy regulation process,” she said. “They can begin to circumvent a lot of policy that may have to be introduced otherwise. “To do this, businesses need to take the lead and provide evidence that they are doing the right thing in promoting a sustainable future, because this can often get lost in the conversation.”

Despite revealing that EEF is “heavily engaged” with relevant Government departments on other areas of energy policy, the organisation has become disheartened by the ”many and sudden” changes implemented by the Tories in recent months..

Clear direction

Wholesale changes to feed-in tariffs, the removal of the zero-homes commitment and the cancelation of the £1bn CCS competition stand out among the many green policy changes that have created an air of uncertainty across a variety of sectors, and Jakobsson says manufacturers have become worried that they are beginning to scare off investors.

“These regulations can be the difference between profit and loss and there’s been too much chopping and changing of policy over the last five years,” Jakobsson said. “We need a clearer idea of where future energy policies are taking us. At the moment the Government keeps moving the goal posts and this is chipping away at manufacturer confidence.

“The key is being able to have time to respond and adjust to the changes, which is something we haven’t necessarily been given. Having the opportunity to plan ahead allows manufacturers to potentially turn a policy reform into an opportunity.”

This lack of clarity over the direction that the Government’s green policy is heading hasn’t been helped by the looming potential of Britain leaving the EU. Jakobsson revealed that the EEF had recently surveyed its members on the Referendum, and the general consensus was that they would vote ‘no’ on Brexit.

“Brexit is just creating uncertainty and the lack of clarity about the competitive edge of Britain’s finances will probably sway the tide for manufacturers over Brexit,” she said.

Claire Jakobsson at edie Live

Claire Jakobsson will be speaking at the edie Leaders Theatre at edie Live in May, discussing the regulatory drivers for staying sustainable in the current policy landscape, alongside associates from DECC, Aldersgate Group and Policy Connect.

If you manage your company’s energy, sustainability, environmental or corporate responsibility, then two days at edie Live will give you a free pass to all the learning, peer-to-peer networking, innovative suppliers and inspiration you need to drive sustainability through your organisation.

View the full edie Live agenda and register to attend for free here.

Matt Mace

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