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INDUSTRY leaders have warned that the Government is 'badly underestimating' the effect of energy and climate change policies on the ceramics sector.
The British Ceramic Confederation (BCC) said that while new Government analysis recognises that businesses are bearing the financial brunt of policy decisions, there are some 'serious exclusions' in costs in its assessments.
The research for the Department of Energy and Climate Change (DECC) reveals that large energy-intensive business users face bills that are up to 14 per cent higher as a result of Government policies.
By 2020, the impact is expected to be between six per cent and 36 per cent.
But the BCC, based in Stoke, says this is despite the DECC not including the direct cost to companies of the EU Emissions Trading System, which many ceramics companies are subject to.
The system helps to set emission levels by allowing firms to buy allowances.
The BCC also says the DECC has not included future extra transmission, distribution and balancing costs required to strengthen the grid for intermittent renewables.
It warned: "Businesses are making dispassionate decisions on where to invest.
"They look at the combined effect of all energy bills and climate related taxes and charges for different countries in their business models – inside and outside Europe – and the UK is not faring well.
"All ceramic businesses compete internationally, they can't just pass on unilateral UK only price increases to customers without losing sales.
"Uncompetitive energy prices and poor energy security will drive energy intensive manufacturing off shore."
Energy intensive industries exist in sectors from ceramics and textiles to refineries, chemicals and plastics.
In the Budget last month, Chancellor George Osborne announced he would extend some support for energy intensive industries to 2015/16 while there will be some processes made exempt from the Climate Change Levy from April 2014.
And although the ceramic industry has welcomed the move, many executives pointed out the savings could be wiped out by a minor increase in energy costs.
Anthony Jones, executive vice president and chief financial officer at Wedgwood owner WWRD, said: "We remain committed to increasing production at our Barlaston site but have suffered significant increases in energy costs in recent years and welcome any support to keep the cost equation in line."
The Government analysis, entitled 'Estimated impacts of energy and climate change policies on energy prices and bills', also showed businesses which are medium-sized energy users are facing cost increases of 21 per cent.
Secretary of State for energy and climate change Edward Davey said: "While energy costs represent less than three per cent of total costs for the manufacturing sector, there is a small section of energy intensive industries facing strong international competition.
"Nothing would be gained from forcing these industries, jobs and emissions abroad.
"That is why we are taking action to reduce the transitional impact of Government policy on the cost of electricity for these users, with measures worth around £250 million over the Spending Review period."
However, the BCC said the ceramic industry is not likely to benefit, with, among other issues, no compensation able to be claimed for the indirect costs of the Emissions Trading System on electricity prices and fewer than 10 per cent of ceramics firms in the running for a partial carbon price floor rebate. Reported by This is 3 hours ago.
INDUSTRY leaders have warned that the Government is 'badly underestimating' the effect of energy and climate change policies on the ceramics sector.
The British Ceramic Confederation (BCC) said that while new Government analysis recognises that businesses are bearing the financial brunt of policy decisions, there are some 'serious exclusions' in costs in its assessments.
The research for the Department of Energy and Climate Change (DECC) reveals that large energy-intensive business users face bills that are up to 14 per cent higher as a result of Government policies.
By 2020, the impact is expected to be between six per cent and 36 per cent.
But the BCC, based in Stoke, says this is despite the DECC not including the direct cost to companies of the EU Emissions Trading System, which many ceramics companies are subject to.
The system helps to set emission levels by allowing firms to buy allowances.
The BCC also says the DECC has not included future extra transmission, distribution and balancing costs required to strengthen the grid for intermittent renewables.
It warned: "Businesses are making dispassionate decisions on where to invest.
"They look at the combined effect of all energy bills and climate related taxes and charges for different countries in their business models – inside and outside Europe – and the UK is not faring well.
"All ceramic businesses compete internationally, they can't just pass on unilateral UK only price increases to customers without losing sales.
"Uncompetitive energy prices and poor energy security will drive energy intensive manufacturing off shore."
Energy intensive industries exist in sectors from ceramics and textiles to refineries, chemicals and plastics.
In the Budget last month, Chancellor George Osborne announced he would extend some support for energy intensive industries to 2015/16 while there will be some processes made exempt from the Climate Change Levy from April 2014.
And although the ceramic industry has welcomed the move, many executives pointed out the savings could be wiped out by a minor increase in energy costs.
Anthony Jones, executive vice president and chief financial officer at Wedgwood owner WWRD, said: "We remain committed to increasing production at our Barlaston site but have suffered significant increases in energy costs in recent years and welcome any support to keep the cost equation in line."
The Government analysis, entitled 'Estimated impacts of energy and climate change policies on energy prices and bills', also showed businesses which are medium-sized energy users are facing cost increases of 21 per cent.
Secretary of State for energy and climate change Edward Davey said: "While energy costs represent less than three per cent of total costs for the manufacturing sector, there is a small section of energy intensive industries facing strong international competition.
"Nothing would be gained from forcing these industries, jobs and emissions abroad.
"That is why we are taking action to reduce the transitional impact of Government policy on the cost of electricity for these users, with measures worth around £250 million over the Spending Review period."
However, the BCC said the ceramic industry is not likely to benefit, with, among other issues, no compensation able to be claimed for the indirect costs of the Emissions Trading System on electricity prices and fewer than 10 per cent of ceramics firms in the running for a partial carbon price floor rebate. Reported by This is 3 hours ago.