Cumulative impact of legislation – need for a rethink

The burning question on the minds of many who work in manufacturing – particularly those operating in Energy Intensive Industries (EIIs) – is whether they are about to be sacrificed on the altars of carbon abatement, renewable energy and environmental compliance schemes.

What is alarming the industry though, is the prospect of further punitive measures being imposed by government both here in the UK and in Brussels. It is the cumulative effects and the unforeseen consequences of these measures that have the potential to seriously damage the competitiveness of not only the paper industry, but all EIIs.

Even in good times, the cumulative cost of all of these measures – many £100 millions – would be difficult to absorb. In the current economic climate they will lead to the demise of many businesses, and not just in the paper sector. Every EII is faced with similar cost pressures, all forced upon them by government. Indeed, we need to question whether climate change/environmental goals are compatible with the overriding economic goal of growth, through increasing the percentage of Gross Domestic Product (GDP) derived from the manufacturing sectors.

At the very least, we need government to recognise that the economic downturn means that it cannot pursue environmental goals as if nothing had happened. We are operating in a very different world now, and both department of energy and climate change and DG Environment need to recognise that "business as usual" is no longer an option.

The department for business, innovation and skills needs to develop a meaningful strategy for manufacturing as a whole and not one simply for a few favoured sectors and SMEs. How about adopting a new target – manufacturing to be 20% of GDP by 2020?

CPI has recently written to all MPs with a detailed breakdown of the issues at the heart of industry's concern and has produced a list of recommendations for government to consider:-

• An exemption from the additional costs of the Carbon Floor Price – to apply to all industries officially recognised as being "at risk of carbon leakage"
• Exemption from the "pass through" costs of renewable energy generation – as in Germany
• Continuation of free allocation of EUETS allowances for on site CHP electricity generation
• Management of Climate Change Agreements to stay with trade associations and the Levy discount to be increased to the maximum allowed under E.U. law
• Deferment of any changes to environmental operating permits to at least 2025
• Agreement on global sustainability criteria for biomass
• An emergency independent review of the costs of the renewable energy programme before it is too late (we do not have any faith in DECC figures)
• A derogation from the Large Combustion Plant Directive to 2020 so that all of our power stations can continue to operate – assuming that they haven't come to the end of their lives.
• A resource efficiency strategy for waste that ensures that paper and board is recovered for recycling and not for Energy from Waste. Only genuinely unrecyclable fibres should be allowed to go for EfW generation.
• Recognition in the forthcoming Water Bill that the paper industry only borrows water – it does not consume it on the same scale as it extracts it.
• Simplification of the Carbon Reduction Commitment regime.

  In this unusually lengthy briefing, David Workman, the CPI's general secretary, also refers to the costs associated with achieving the UK's renewables target, the revision to Climate Change Agreements, the introduction of the UK's Carbon Floor Price and the specific effects on the Paper Industry of the forthcoming Water Bill and the revision to the emission limits contained in the Paper Industry BREF.