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Tata, GrowHow May Exit U.K. as Climate Laws Boost Power Costs
2010-07-26 23:01:00.4 GMT
By Catherine Airlie
July 27 (Bloomberg) -- Companies including Tata Steel Ltd.
and GrowHow U.K. Ltd. may leave the U.K. as climate-protection
policies boost electricity and natural-gas costs.
Factories will pay 18 percent to 141 percent more for gas,
electricity and carbon-reduction programs by 2020, adding about
7 million pounds ($11 million) to the bill for a typical large
energy consumer, the London-based Energy-Intensive Users Group
and Britain's Trades Union Congress said in a report on the
impact of climate policy released today.
"The combined impact of the government's climate change
policies is imposing significant costs on the U.K.'s energy-
intensive industries, and without urgent review could see some
companies leaving the U.K. for good," according to the report.
The government subsidizes renewable power from sources such
as wind, solar and biomass via levies on electricity bills. It
plans to extend funding to carbon-capture technology and
renewable heat sources as well as impose a minimum price for
emitting carbon dioxide. Britain's power stations and factories
must also comply with Europe's emissions trading program, which
requires purchases of carbon permits.
"Many of the taxes and costs identified in this report are
U.K.-specific and will reduce the competitiveness of Corus'
British operations," Kirby Adams, managing director and chief
executive officer of Tata Steel Europe said in an e-mailed
statement sent with the report. Corus, Britain's largest steel
manufacturer, is part of Tata Steel Group.
Second Report
The U.K.'s manufacturing industries, which include steel,
ceramics, paper, cement and fertilizers employ about 225,000
people and could produce components such as wind turbines,
electric cars and home-insulation materials needed to slash the
nation's emissions, according to the report. It's the second
report this month suggesting potential job losses in Britain
because of climate policy.
The U.K. has committed to slash its emissions by 34 percent
below 1990 levels by 2020, beyond a European-wide initiative to
cut emissions by 20 percent. The country's CO2 emissions fell by
8.6 percent in 2009 as the economic crisis curbed production at
power stations and factories, according to a report published by
the U.K.'s Commission on Climate Change, set up in 2008 to
advise the government.
GrowHow, a fertilizer maker, said current policies "will
almost certainly" make carbon leakage a reality. Carbon leakage
is a term used to describe factories moving operations to
countries where permits for emitting carbon dioxide are not
needed.
Britain's climate policies make it harder for U.K.
factories to compete, Wayne Sheppard, chief executive of Ibstock
Brick Ltd., said in the statement.
"We want to invest more in the U.K., but we are competing
for funds from our parent company with our other plants in
Europe and around the world," said Sheppard, who is also
president of the British Ceramic Confederation.
Corus U.K., GrowHow, Ibstock Brick, Sheffield Forgemasters
and Rio Tinto Alcan Inc. were among companies with factories in
Britain who took part in the report, written by London-based
consultant Waters Wye Associates.
For Related News and Information:
Top Power Stories: PTOP <GO>
U.K. Power Prices: ELEU <GO>
Emissions Pricing: EMIT <GO>
--Editors: Rob Verdonck, Stephen Cunningham
To contact the reporter on this story:
Catherine Airlie in London via +44-20-7073-3308 or
cairlie@bloomberg.net.
To contact the editor responsible for this story:
Stephen Voss at +44-20-7073-3520 or sev@bloomberg.net
