Carbon Floor Pricing contributing to UK steel crisis, says think tank

Global Warming Policy Foundation calls on government to scrap costly policy

UK think tank the Global Warming Policy Forum (GWPF) is calling on the government to scrap Britain’s unilateral Carbon Floor Price, which it said is contributing to the crisis of UK steel and other energy intensive industries.

The Carbon Floor Price is a unilateral carbon tax that came into effect on 1 April 2013 at a floor price of £16 per tCO2. It will rise to £18 per tCO2 from 2016-20. Along with substantial falls in steel prices, the GWPF said the UK’s uncompetitive electricity prices have been a contributing factor to the closure of the plant in Redcar.

SSI’s decision to close its steel plant in Redcar – which is expected to result in 1,700 job losses – has led to the government setting up a steel summit.

The GWPF has previously warned government about the rising policy cost of electricity prices which are expected to increase by 47% by 2020 for large industrial energy consumers. The UK’s extra large users of electricity are already paying nearly twice as much for power as the EU average.

Dr Benny Peiser, GWPF director, said: “Energy intensive industries – including UK steel – are facing a growing competitiveness crisis. Britain’s unilateral climate policies are racking up electricity prices and are adding to the cost burden.

“Government policies to compensate the steel industry for high electricity prices are merely a sticking plaster, and do not solve the issue of competitiveness in the long term.

“The Government should consider scrapping the Carbon Price Floor that is hitting UK manufacturers. They also need to bear down on the growing costs of renewable energy subsidies.”