Energy taxes for energy intensive industries in the UK are significantly higher than in other countries, putting UK manufacturers at a competitive disadvantage, according to a government report.
The Department for Business, Innovation and Skills (BIS) commissioned report predicts that by 2020 UK firms will have to pay an extra £28.30 in green taxes on top of the market price they pay for every megawatt hour of electricity and was carried out by consultants ICF International.
This is almost double the forecasted price for companies in Denmark and France, which will have to pay £15.70 and £15.20, respectively, and almost triple the expected price for firms in China, which will have to pay an extra £10.30.
Steelmakers and manufacturers of cement, industrial gases and chlor-alkali will feel the effects of the 49% increase of megawatt hour price, which currently stands at £14.20.
Manufacturer organisation, the EEF, believes that the absence of a global deal on climate change is creating a ‘beggar thy neighbour’ approach with different countries pursuing carbon reduction policies at different rates and cost, even within the EU.
It has warned that unless this is addressed by government, firms may be forced abroad to regions where carbon controls are not as expensive.
EEF chief executive Terry Scuoler said: “UK manufacturers want to play a key role in helping to deliver the low carbon economy but they can’t with one hand tied behind their back.”
He added: “This report provides clear, independent evidence supporting concerns we have long put to government – that UK manufacturers in energy intensive sectors are paying more for their electricity than many of their global and European competitors.”
A spokesman for global steel maker Tata Steel shared the view taken by Mr Scuoler: “This report is persuasive evidence that the time has come for the government to play its part by reviewing its green tax policies.”
Tata Steel has facilities in Port Talbot, Scunthorpe and Rotherham.