UK firms face 20% hike in energy bills

24th November 2011


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IEMA

Companies in the UK are likely see energy costs rise by up to 20% by 2020 as a result of the government's climate change policies, confirms energy secretary Chris Hune.

In announcing the government’s annual energy statement yesterday (23 November 2011), Hunhe acknowledged the policies in place to improve energy efficiency across the UK were typically going to add 19% to energy bills for the average medium energy consuming businesses and up to 20% for energy-intensive organisations.

Hunhe went on to renew government pledges to assist businesses, particularly those in energy-intensive sectors, in coping with increased energy costs.

“It is important that these industries remain competitive,” he said. “That is why we are working with the business department and the Treasury to announce measures before the end of the year to support those energy-intensive industries whose competitiveness is most at risk.”

EEF, the manufacturers’ organisation, reacted to the announcement by highlighting its findings that energy-intensive organisations are already paying 10% more than their German competitors, due in part to government policy, and that this is likely to widen to 15% by 2013.

“The analysis released today reinforces the urgent need for measures to safeguard the jobs and investment in Britain’s energy-intensive industries,” warned Steve Radley, EEF director of policy. “The government needs to get a firmer grip on the energy costs most directly under its control – those arising from its own policies. Failure to do so could threaten future investment in the manufacturing sector.”

Meanwhile the CBI welcomed government’s acknowledgement of the role that short-term energy costs plays in organisations’ deciding whether they can keep operating in the UK, but warned that policy certainty was the key to enabling the move to a low-carbon economy.

“The solution to energy prices in the long-term is to attract new investment in low-carbon infrastructure,” said Rhian Kelly, CBI director for business environment.

“We need the right policies in place to help reduce energy bills and attract essential investment for more secure, affordable and low-carbon energy infrastructure. Following the government’s recent unexpected changes to the solar feed-in tariff, it still has a long way to go to build business confidence.”

While the response from industry was mixed, DECC’s figures were welcomed by the renewable energy sector. It argues the data counters accusations in the mainstream press that support for renewables is resulting in larger household energy bills.

“The figures demonstrate this simple truth – that green measures, far from being expensive, can actually save us money,” said Maria McCaffery, chief executive of renewable energy trade association RenewableUK. “The 18p we’re paying for wind power now means our bills will be lower in the future – and we’ll have tens of thousands of new green-collar jobs, thanks to that investment.”

The estimates from DECC conclude that energy and climate change policies currently add 2% to the average household energy bill, and by 2020 energy efficiencies resulting from support for renewable energy would see consumers save 7% (£94 a year) on the cost of heating and powering their homes compared to what they would pay in the absence of such assistance.


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