Confederation of Paper Industries (CPI) director general David Workman has written to Chancellor of the Exchequer George Osborne to warn that Government policy could drive the paper industry overseas.
In a letter to the Chancellor, David Workman warned that the cumulative impact of policy on energy, carbon and wider environmental policies are having a significant impact on recovered and virgin paper mills.
He argued that policies are making energy so expensive that paper manufacturers may have no option but to seek cheaper alternatives in other countries.
In his letter, he also noted that UK paper mills had used 42 per cent less fossil energy to make each tonne of paper than they did in 1990.
He added: “National carbon accounting focuses on direct emissions in the UK, meaning swapping UK manufactured goods for imported ones simply offshores the emissions, resulting in no reduction in global emissions. Of course, alongside the emissions being offshored, so also are the jobs and wealth creation that we should be benefitting from as we seek to rebalance the economy.”
The CPI has also warned that over the long-term, UK manufacturers can expect increased costs well in advance of those faced by competitors overseas.
He added: “An example of misguided policy is the forthcoming Carbon Price Floor (CPF), through which the cost of electricity in the UK will be inflated as additional taxation is applied to fossil fuels when used to generate electricity. This is presented as a green measure, but fails in two areas.
“Technically, the aspiration to reduce carbon emissions will not be met because the overall EU emissions cap is not reduced, meaning industry elsewhere in the EU will benefit from lower costs.
“Practically, UK industry will be locked into guaranteed higher energy prices than that elsewhere. While the initial levels of taxation are of concern, the inbuilt annual cost increase means the cost of this policy will quickly escalate, increasing electricity costs across the UK. Figures from DECC indicate substantially higher electricity costs through to the 2020s and then possibly marginally lower thereafter – guaranteed pain now, maybe less pain later.”
As a result he would like to see measures introduced such as more support for energy efficiency programme for major industries, rethink of the CPF cost escalator, and support the further deployment of combined heat and power generation through feed-in tariffs or other support mechanisms.