London, 31 May 2024 – The Energy Intensive Users Group (EUIG) has today published its manifesto for the upcoming election on the 4th of July. Energy intensive industries (EIIs) manufacture goods that are crucial for the UK to move to a Net Zero economy, contribute around of £29bn GVA to the UK economy annually and support 210,000 jobs directly and 800,000 jobs indirectly around the country.
Competitive industrial electricity prices are vital for EIIs , but electricity prices in Great Britain have been higher than in other countries over the past years. This has deterred investment in the UK. Various Governments have taken measures to reduce higher prices, but an unlevel playing field still remains. The EIUG calls for delivery of the ‘British Industry Supercharger’ package, increase in the rate of compensation for network charges from 60% to 90% and further work to see how EIIs can access lower wholesale electricity prices.
It is more challenging to reduce greenhouse gas emissions from EIIs. Most technologies to decarbonise industrial processes are still in demonstration phase and require high upfront capital cost. Private investment will play a significant role, but Government funding will be key to leverage this. A Net Zero Investment Plan should identify ongoing investment gaps whilst avoiding putting EIIs at a competitive disadvantage internationally.
To mitigate the risk of carbon leakage for EIIs, a new Government should deliver a long-term and stable carbon market policy and introduce a well-designed and properly-enforced UK carbon border adjustment mechanism (CBAM) that is consistent with the EU CBAM. This will level the playing field in terms of carbon prices and stop other countries undercutting the UK’s Net Zero ambitions.
Arjan Geveke, Director of the EIUG said; “The political parties should recognise the crucial role energy intensive industries play in achieving Net Zero, in their local economy and for employment. Relative higher GB industrial electricity prices and risk of carbon leakage have deterred the private investment needed for these industries to decarbonise and compete internationally. The proposals in the manifesto will go a long way to address these and for EIIs to thrive in a low carbon economy”.