North East firms attack Govt plan to cut carbon

Posted on 4 Apr 2011 by The Manufacturer

Energy-intensive businesses in the North East fear the measures introduced by the Government’s Budget might lead to the loss of hundreds of jobs.

Carbon-cutting policies will further penalise CO2 emitters and tax the oil industry, which invests extensively in the North Sea and, therefore, the North East of England. The sector warned that the measures could cost the region millions.

Rio Tinto Alcan, one of the world’s largest producers of bauxite, alumina and aluminium, based in Lynemouth, said it could end up spending an extra £40m a year, which would cancel its annual profits, and that this is threatening over 600 jobs at the company’s plant.
In a bid to abide to the new regulation, Rio Tinto Alcan is now looking at using wood rather than coal to operate the site’s power station.

John McCabe, corporate affairs director at Rio Tinto Alcan, commented: “If we do nothing it would be very difficult to see how there could be a long-term future for the plant. We are already a high-cost operation and as such we have an unsustainable long-term future if we don’t change how we operate.”

Meanwhile, bosses from the subsea sector, which employs a workforce of 10,000 in the region, said it feared major gas and oil companies would withdraw investment and even reduce existing operations in the North Sea because of a planned £2bn windfall tax on the industry.

Malcolm Webb, Oil & Gas UK’s chief executive, said: “The UK oil and gas industry believes that the tax change announced in last week’s Budget is ill-informed and was constructed hurriedly and without proper thought of the potential impacts on investment, production and hence energy supply and employment. As a result of this new and totally unexpected tax rise, and as we forecast, we have already seen some significant developments being halted.”