Alex cautions against burdensome taxes for energy intensive sector

The proud industrial heritage of the Tees Valley is under threat, Alex Cunningham has warned, and the decline of vitally important industries in the region will be hastened without actions to lessen the burdens posed by carbon taxes and levies.

Leading a debate in the House of Commons on energy intensive industries, Labour’s Stockton North MP was keen to highlight the various regulatory hurdles that energy intensive industries find themselves up against and the very real threat that they face from overseas competition as a result.

On top of energy prices that are restrictively high in some cases, coupled with the requirements to reduce carbon emissions to meet UK targets, energy intensive industries in the UK are also faced with an EU-wide Emissions Trading System that makes emitters financially liable for their emissions and a Carbon Price Floor does that significantly increases the proportion of decarbonisation costs borne by UK electricity users.

This mix of high energy prices that compare poorly with much of Europe and the rest of the world, alongside unfavourable domestic policy costs, is driving investment decisions and is likely to lead to companies relocating overseas in the long-term rather than developing their businesses in the UK.

Alex said:

“Through my conversations with energy intensive industries, I understand that no other country has imposed a policy similar to the Carbon Price Floor here in the UK, nor have they plans to do so.  This limits the competitiveness of those in the sector – many of whom who are unable to pass these costs through to their customers and are therefore at risk of setting up shop overseas where costs are lower.

“The UK must strive to avoid meeting its carbon targets by offshoring state of the art, energy-efficient EIIs.  Energy intensive industries need access to secure, internationally competitive energy supplies if they are to continue locating in the UK and investing in areas such as the Tees Valley.  And this means a level playing field within the single market, taking account of the cumulative burden of climate policies on industrial energy prices.

“Our objective must be sensible and economically sustainable decarbonisation, not de-industrialisation.  So we must think outside of the box and look beyond punitive taxation schemes for alternative means to decarbonise, sending a signal to the rest of the world that it is possible to retain industry and decarbonise simultaneously and leading by example.

“The industries I have spoken with strongly support the drive for greater energy efficiency, and the Tees Valley is leading the way in areas such as energy from waste and carbon capture and storage.  But we need to do more if we are to preserve our industrial heritage, and the jobs and skills that go with it.”