Climate change policies to increase firms’ costs

Climate change policies could add to the cost of power for energy intensive companies, a new Government study has found.

Department of Energy and Climate Change estimates show that energy-intensive industries, such as steel factories and paper mills, may have to pay up to 58 per cent more for electricity by 2030.

However, they also show that they would face paying up to 48 per cent more for their energy bills (electricity and gas) by 2030, compared to what it would cost them without climate change policies.

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The Department of Energy and Climate Change said that the Government would be announcing measures for energy-intensive businesses affected by climate change policies by the end of the year.

A spokesman for the department said: “Energy and Climate Change Secretary Chris Huhne announced on May 17 that as part of the transition to a low carbon economy we need to ensure that energy-intensive industries remain competitive and that we send a clear message that the UK is open for business.

“There would be no advantage – either for the UK economy or in terms of global emissions reductions– in simply forcing industrial production to relocate to other countries.”

The study estimates the cumulative impact of energy and climate change policies on large energy-intensive users’ gas and electricity prices and bills in 2011, 2020 and 2030.

The report also claims that average electricity prices faced by large industrial users rose by 45 per cent in just two years – between 2007 and 2009 – due to volatile fossil fuel prices.