Business Energy Prices Set to Rise from Green Commitments
A recent study by the independent think tank civitas suggests that businesses and not consumers are set to pay for the green initiatives which will see climate change levys soar in the next 10 years.
The civitas reports cites legislation and reports undertaken under the previous labour government saying that due to green commitments under the climate change act 2008 and the EU renewables directive 2008 surcharges made to consumers amounted to 14% of their electricity bills and for businesses 21%.
These surcharges are there on all of us in an effort for the UK to meet these legal targets whereby the UK must cut greenhouse gas emissons by at least 80% by 2050 and the more pressing one from the EU whereby the UK must have at least 15% of its energy consumption from renewable sources in just under 10 years time by the end of 2020.
Currently renewables was just 1.3% in 2005 although that figure it thought to be around 5% in the current year and gradually climbing. However the pain does not stop there and the department of energy and climate change (DECC) has a sobering report.
Climate change surcharges set to triple for business customers
The DECC report under their renewable energy strategy which was published in 2009 and although widely available the small print has stark warnings about surcharges for electricity customers :
- for homeowners they believe the surcharge will rise from 14% to 33%
- and most worrying for businesses the surcharge will rise from 21% to a massive 70%
As always it’s business customers who will bear the brunt of all these green initiatives that were developed and signed up to from the labour administration. In tough times where businesses need to cut their costs sometimes just to survive this warning could not have come at a worse period in the economic cycle.
Manufacturing thought to be hardest hit
Of course most businesses just need electricity for heating and lighting but the report authors from civitas highlight the issues with manufacturing industries who rely heavily on electricity power to supply their machinery. Where the UK once shined for its manufacturing recent decades has seen a decline mainly through the non competitiveness of the cost of supply so having a legal obligation to increase one of their main costs is certainly not going to help these businesses get the UK economy rolling once more.
The report author Ruth Lea hits the nail firmly on the head when she says
The economy desperately needs a competitive and thriving manufacturing sector if it is to prosper. Competitive energy prices are vital to the success of manufacturers, especially energy intensive users. Government energy policies are, however, remorselessly driving up energy costs thus risking the ‘migration’ of manufacturing plants to economies where the costs are lower.
Of course the UK needs to develop its renewable energy sources to replace the existing power supplies and to cut its emissions greatly but to hit businesses the hardest at these times is not the right answer. Hopefully the new coalition government can come up with an alternative plan. The civitas report can be found here on their website.
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