DECC reveals potential cost of energy policy

1st August 2011

Related Topics

Related tags

  • Business & Industry ,
  • Water ,
  • Resource extraction ,
  • Manufacturing



Government confirms promise to help energy intensive industries as figures reveal that energy and climate change policy could increase energy bills by at least 3%.

Released on Friday, the provisional estimate’s from DECC show that energy bills for high-energy consuming industries such as manufacturing, cement and steel making, could be 3%–16% more expensive this year, due to policies such as the Renewables Obligation and the carbon floor price.

While the figures are lower than those published last year, mainly because of the proposals in the electricity market reform (EMR) White Paper and the decision to fund policies such as the renewable heat initiative through general taxation, there are still clear indications of increased energy bills into the future.

According to DECC, if fossil fuel prices remain at current levels policies to increase energy efficiency and decarbonise electricity could lower gas bills by 3%, however, electricity bills will potentially increase by as much as 22% by 2020.

However, the energy department argues that in reality fossil fuel price volatility will remain a more significant driver of energy price changes than policy decisions. It also claims that the EMR will lower bills. ”With EMR policies, retail electricity prices and bills…are estimated to be 2% lower in 2020 and 8% lower in 2030” compared to bills without EMR policies,” says DECC.

Manufacturing body, the EEF said the new assessment was a marked improvement on previous efforts by DECC, but warned that more work needed to be done.

“In particular, there needs to be genuine comparisons of what energy intensive manufacturers in the UK and abroad pay for electricity,” argues Steve Radley, director of policy at EEF.

“Industry will also want to look in greater detail at some of the assumptions on which the more debatable conclusions are reached.”

Rhian Kelly, the CBI’s director of business environment, agrees: “This impact assessment is an important first step in providing greater clarity about the potential impact of climate change and energy policies, but it doesn’t go far enough.

“What is needed is a full international comparison of energy prices to ensure that UK companies are not at a disadvantage compared with other countries. To provide an accurate picture, this assessment must take into account different subsidies and support available elsewhere.”

Alongside the financial estimates of the potential costs of energy policy, DECC reiterated the government’s Budget promise that is working to develop a set of policy measures to ensure energy-intensive industries were not left at a competitive disadvantage.

In June, at the CBI’s energy conference, energy minister Charles Hendry said it would be “madness” to end up in a situation where large firms moved overseas to remain competitive.

“We would then lose jobs, and carbon emissions would still be emitted in other parts of the world,” he said. “We are determined to address the threat of carbon leakage and make sure these businesses have a long term viable future in this country.”


Subscribe to IEMA's newsletters to receive timely articles, expert opinions, event announcements, and much more, directly in your inbox.

Transform articles

Swing voters show strong support for renewables

There is strong support for renewable energy as a source of economic growth among UK voters, particularly among those intending to switch their support for a political party.

16th May 2024

Read more

A project promoter’s perspective on the environmental challenges facing new subsea power cables

3rd April 2024

Read more

The UK’s major cities lag well behind their European counterparts in terms of public transport use. Linking development to transport routes might be the answer, argues Huw Morris

3rd April 2024

Read more

Tom Harris examines the supply chain constraints facing the growing number of interconnector projects

2nd April 2024

Read more

The UK government’s carbon capture, usage and storage (CCUS) strategy is based on optimistic techno-economic assumptions that are now outdated, Carbon Tracker has warned.

13th March 2024

Read more

The UK government’s latest Public Attitudes Tracker has found broad support for efforts to tackle climate change, although there are significant concerns that bills will rise.

13th March 2024

Read more

A consortium including IEMA and the Good Homes Alliance have drafted a letter to UK government ministers expressing disappointment with the proposed Future Homes Standard.

26th February 2024

Read more

Global corporations such as Amazon and Google purchased a record 46 gigawatts (GW) of solar and wind energy last year, according to BloombergNEF (BNEF).

13th February 2024

Read more

Media enquires

Looking for an expert to speak at an event or comment on an item in the news?

Find an expert

IEMA Cookie Notice

Clicking the ‘Accept all’ button means you are accepting analytics and third-party cookies. Our website uses necessary cookies which are required in order to make our website work. In addition to these, we use analytics and third-party cookies to optimise site functionality and give you the best possible experience. To control which cookies are set, click ‘Settings’. To learn more about cookies, how we use them on our website and how to change your cookie settings please view our cookie policy.

Manage cookie settings

Our use of cookies

You can learn more detailed information in our cookie policy.

Some cookies are essential, but non-essential cookies help us to improve the experience on our site by providing insights into how the site is being used. To maintain privacy management, this relies on cookie identifiers. Resetting or deleting your browser cookies will reset these preferences.

Essential cookies

These are cookies that are required for the operation of our website. They include, for example, cookies that enable you to log into secure areas of our website.

Analytics cookies

These cookies allow us to recognise and count the number of visitors to our website and to see how visitors move around our website when they are using it. This helps us to improve the way our website works.

Advertising cookies

These cookies allow us to tailor advertising to you based on your interests. If you do not accept these cookies, you will still see adverts, but these will be more generic.

Save and close