Energy intensive companies must be found a place in the UK's green economy

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date: 26 July 2011

embargo: 00.01hrs Wednesday 27 July 2011

UK companies producing steel, cement, ceramics, glass, aluminium and chemicals are vital to the UK economy, but face serious risks as a result of rising energy costs, says a new study published today (Wednesday) by the TUC and the Energy Intensive Users Group (EIUG).

Technology Innovation for Energy Intensive Industry in the United Kingdom - prepared for the two organisations by the Centre for Low Carbon Futures - says that these energy intensive companies must innovate to survive, and calls on the government to make sure there is a place for them in its plans forthe low carbon economy of the future.

These industries directly employ some 125,000 people in 2,800 individual businesses around the UK, and many more employees are to be found within their supply chains. The annual turnover of the UK's energy intensive sector is approximately £23 billion, which contributes around £5 billion to the UK economy, says the report.

Technology Innovation for Energy Intensive Industry in the United Kingdom says that to remain part of the UK's economic future, there must be a much stronger government policy focus on low carbon manufacturing - and on moves to limit the carbon emissions produced by the power sector - if the competitiveness of UK heavy industry is to be ensured.

According to the report, much of the energy intensive sectors require 'transformative technologies' to cut their emissions significantly. Key priorities include carbon capture and storage for industries like steel and chemicals, process changes, and switching to biomass as an energy supply.

Long-term regulatory reform, policy support and finance are all also required to bridge the gap between the initial research stages and the commercial viability of these emerging technologies, says the report.

The new study took first-hand evidence from industry to assess the innovative low carbon technology solutions needed for the UK's key energy intensive sectors. Potential technology options, barriers to low carbon investment and the need for policy support and technical co-operation were examined sector by sector.

The research reflects the similar aims of employers and unions to support the successful transition of these key industries to a low carbon economy.

The broader benefits of securing the future of the energy intensive sectors and their emissions reduction potential must be recognised, says the report, which requires a supportive policy framework and an ongoing dialogue between government, industry and the unions.

TUC General Secretary Brendan Barber said: 'The jobs of thousands of employees are dependent upon the ability of our energy intensive industries to remain part of the UK's economic success story.

'But they can only do so if the conditions are created to enable them to do this, and investors are sufficiently convinced to put their money into the new green technologies. This is where the government comes in. Ministers must start planning for a low-carbon economy which has our energy intensive industries at its heart.'

Jeremy Nicholson Director of the EIUG said: 'This report highlights promising means by which energy intensive industries could reduce their carbon emissions, provided appropriate policies are put in place.

'It is time government examined how revenue from green taxes could support British industry in the demonstration and development of these globally important decarbonisation technologies.'

Dr Paul Brooks, Group Director (Environment), Tata Steel said: 'Energy efficiency and emissions reductions are important aspects of Tata Steel's climate change strategy. We welcome this study, which highlights available technology opportunities, but which also recognises the importance of a level playing field in determining the competitiveness and longer term sustainability of important energy intensive industries such as steel.'

Michael Leahy, General Secretary of Community, and President of the TUC said: 'We need to move quickly to make sure the recommendations are put into action. There is a real opportunity here for government, employers and unions to work together to create the conditions for a successful and sustainable UK energy intensive sector. The green investment bank can have a significant role to play in that process.'

Chief Executive of the British Ceramic Confederation Laura Cohen said: 'We welcome the study. It is important that the government helps support demonstrator projects for energy efficiency and emission reduction technologies in energy intensive industries, recycling some of their green tax receipts.

'Equally, once technologies are proven, companies need access to finance for roll-out of these technologies. Bearing in mind that payback is often longer than boards and banks require, the green investment bank has a critical role to play here.'

Tony Burke, Assistant General Secretary with responsibility manufacturing at Unite the Union, said: 'Unite welcomes this extensive study and the importance it attributes to the role of manufacturing in delivering the low carbon economy.

'Government must recognise the significance of the UK energy intensive industries and take every necessary step to ensure that they can compete on a level playing field by accepting its overall responsibility to facilitate investment in new technologies. Without such investment and subsequent innovation the UK will merely end up importing such products from economies with far less stringent carbon emissions targets.'

NOTES TO EDITORS:

- The Centre for Low Carbon Futures is a collaborative membership organisation that focuses on sustainability for competitive advantage. Founded by the universities of Hull, Leeds, Sheffield and York, the Centre brings together multidisciplinary and evidence?based research to both inform policy making and to demonstrate low carbon innovations. Our activities are focused on energy systems, smart infrastructure and the low carbon economy - www.lowcarbonfutures.org

- The Energy Intensive Users Group represents industries such as steel, chemical, paper, cement, ceramics, aluminium and industrial gas producers that depend on access to secure, internationally competitive energy supplies to remain in business. EIUG supports cost effective action to reduce carbon emissions from UK industrial processes and energy production, provided this results in genuine reductions in global emissions.

- Technology Innovation for Energy Intensive Industry in the United Kingdom is available at http://www.tuc.org.uk/EIItechinnovation

Contacts:

Media enquiries:
Liz Chinchen T: 020 7467 1248 M: 07778 158175 E: media@tuc.org.uk
Rob Holdsworth T: 020 7467 1372 M: 07717 531150 E: rholdsworth@tuc.org.uk
Elly Gibson T: 020 7467 1337 M: 07900 910624 E: egibson@tuc.org.uk

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