Confederation of Paper Industries (CPI) director general David Workman has written to the UK government on his fears for the competitiveness of the UK paper manufacturing industry in light of the cumulative effects of current government energy, carbon and wider environmental policies.
Writing on behalf of the UK’s paper-based industries, Workman believes such policies will make energy in the UK so expensive that energy intensive industries (EIIs), such as paper, will be “driven abroad”.
CPI calculates that the UK’s paper manufacturers (including recovered paper merchants, paper and board manufacturers and converters, corrugated packaging producers and makers of soft tissue papers) face increases in costs amounting to “several £100m between 2013 and 2020”.
In his letter to the Chancellor of the Exchequer George Osborne, Workman outlined that papermaking is an intrinsically energy intensive process, but that UK manufacturers need internationally favourable energy prices to remain competitive and to continue to attract inward investment.
Ahead of the UK government’s forthcoming pre-Budget Autumn Statement, Workman also advised that 2013 is a “critical year” for the industry as it marks the start of the next phase of the EU Emissions Trading Scheme (ETS), the introduction of the Carbon Price Floor (CPF) and new and “challenging” Climate Change Agreement targets.
“National carbon accounting focuses on direct emissions in the UK, meaning swapping UK manufactured goods for imported ones simply offshores the emissions, resulting in no reduction in global emissions,” says Workman.
“Of course alongside the emissions being offshored, so also are the jobs and wealth creation that we should be benefitting from as we seek to re-balance the economy,” he adds.
Workman draws attention to the “continued investment” made by the paper manufacture sector in energy efficiency, and the fact that UK paper mills “now use 42% less fossil energy to make each tonne of paper than they did in 1990” (audited figure as quoted in the DECC review of Climate Change Agreements, 2011).
CPI acknowledges measures taken by the UK coalition government to help mitigate the effects of achieving the UK’s “ambitious” carbon reduction and renewable targets, and the £250m support package for EIIs announced in the 2011 Autumn Statement, but says it is “a mere drop in the ocean of what is needed to offset the cumulative cost impact of current government policy”.
Wokman has proposed outline measures the paper industry would wish to see announced in the government’s Autumn Statement this year:
- Support for a major industrial energy efficiency programme by allocating a substantial amount of the money raised from industry in Emissions Trading Scheme (ETS) and CPF taxation for this purpose
- Rethink the CPF cost escalator: “An increase in electricity related carbon costs from effectively zero in 2012 to £33 (per tonne carbon dioxide) in 2020 is simply competitively unsustainable. Ideally, we would seek to abandon the CPF altogether,” says Workman
- Reward and support investment in on-site electricity generation for self-use by exempting it from taxation: “Present policies are destroying the economic case to invest,” says Workman
- Support the further deployment (and retention of existing plant) of more efficient Combined Heat and Power (CHP) generation through feed-in tariffs or other support mechanisms
- Accept that for energy security a mix of generation technologies is required and that gas will have a major role to play through to at least the 2030s
CPI represents 70 member companies from an industry with an aggregate annual turnover of £5 billion, 25,000 direct and more than 100,000 indirect employees.
According to CPI, between 1990 and 2010 the UK papermaking industry reduced total energy use by 34% per tonne of paper made, and annual emissions of fossil carbon dioxide by 1.6m tonnes or 42%.
Over 80% of all corrugated cardboard boxes are recycled, giving the corrugated industry the best UK recycling rate of all packaging materials.
