17 Sept. 2021. The new Chair of the Energy Intensive Users Group (EIUG) calls for immediate steps in the face of unprecedented recent increases in energy prices to maintain the international competitiveness of a key economic sector.
Citing the impact of the recent energy price increases on EIUG members in both the steel and fertiliser sectors1, Dr Richard Leese commented:
‘This week’s announcements from the steel and fertiliser sectors of reduced and halted production are evidence of the impact exorbitant energy prices are having on UK Energy Intensive Industries (EIIs). They are also a reminder that UK EIIs’ energy costs have been, and without intervention will remain, higher than those of their international competitors. The current increases in energy prices should be a wake-up call for Government and Ofgem. We are calling on them to use their collective powers and take urgent action. All we ask for is a level playing field on energy prices.’
EIUG is calling for action in several areas:
• Ahead of the winter, Government must set out plans to address the impact of recent energy price increases on EIIs - including learning from examples in other countries - as well as ensuring security of supply over the winter.
• Ofgem should undertake an immediate assessment of the appropriateness of both current market and emergency arrangements, as well as their market monitoring measures regarding generator behaviour and energy import infrastructure use.
• Government must address the scale of climate policy costs faced by UK EIIs compared to their international competitors, as part of its proposals to address affordability & fairness.
• BEIS should direct Ofgem to use its powers to address the disparity between GB industrial energy prices and those of near competitors.
• Ofgem must act on its own analysis of industrial energy prices2, to address the higher gas and electricity network costs faced by UK EIIs relative to their international competitors.
1 News from UK Steel - Recent power price spikes | Make UK https://cfindustries.q4ir.com/news-market-information/press-releases/news-details/2021/CF-Industries-Holdings-Inc.-Announces-Halt-of-Operations-at-UK-Facilities/default.aspx
Notes to editors:
Dr Richard Leese, Director – Industrial Policy, Energy and Climate Change at the Mineral Products Association took over the chair of EIUG for a two-year term on 15th September 2021 from Andrew Large, Chief Executive, Confederation of Paper Industries.
The EIUG represents the UK’s Energy Intensive Industries (EIIs) including manufacturers of steel, chemicals, fertilisers, paper, glass, cement, lime, ceramics and industrial gases. EIUG members produce materials which are essential inputs to UK manufacturing supply chains, including materials that support climate solutions in the energy, transport, construction, agriculture and household sectors. They add an annual contribution of £38bn to UK GDP, supporting 200,000 jobs directly and 800,000 jobs indirectly around the country.
These foundation industries are both energy and trade intensive – remaining located & continuing to invest in the UK and competing globally requires secure, internationally competitive energy supplies and freedom to export without tariff barriers. However, inward investment, growth and competitiveness have been hampered for years by UK energy costs higher than those of international competitors. In some cases, investment, economic activity & jobs have relocated abroad, leading to a subsequent increase in imports.