Wednesday 13 July 2011

Carbon price floor must not force business out of UK

The carbon floor price could put even more pressure on businesses already struggling and even give them doubts about staying in the UK, it has been suggested.The floor price, a leg of the Government's Electricity Market Reform announced yesterday, sets a bottom price of around £16 per tonne of carbon dioxide emitted by large businesses.

John Cridland, Director-General at the Confederation of British Industry, which represents 240,000 businesses, said: "Some energy intensive industries are already on a knife edge, and without help to shield them from new measures like the carbon floor price, they could struggle to stay in the UK."

Others echoed these sentiments, with the Institution of Mechanical Engineers (Imeche) advising that many businesses needed protection from "painful" energy price rises.

Dr Tim Fox, Head of Energy and Environment at Imeche said: "Measures must be taken to protect vulnerable consumers and strategic industries and government needs to ensure it doesn't force energy intensive industries out of the UK and into countries with less ambitious emissions reduction targets. This is of benefit to neither the UK economy nor the environment."

Presenting the EMR White Paper to the Commons yesterday, Chris Huhne admitted that the carbon floor price teamed with rising wholesale costs could lead to higher bills even without the huge investment needed in new infrastructure.

The Energy Secretary added that the carbon price floor announced by the Chancellor would be "reducing uncertainty for investors and providing a stronger incentive to invest in low carbon generation."