Energy prices will rise faster in the UK than in any other major economy thanks to climate change levies due to start coming in from next year.
The revelation was made by the department for Business, Innovation and Skills (BIS) in the first ever report on the impact on manufacturing of the UK’s renewable energy commitments.
CPI director general David Workman warned that the soaring cost of energy in the UK, which is already higher than in Russia or the United States, was discouraging potential investors in a time of austerity.
He said: "The coalition said it wanted to be the greenest government yet, but expensive measures to achieve that are a tall ask in this difficult economy."
The Carbon Price Floor, to be introduced exclusively to the UK in April 2013, will also impose an initial cost of £16 per tonne, rising to £30 per tonne by 2020 – a further cost which will offset the UK’s ability to compete.
Workman branded the policy "total folly" and said the government was "naïve to pursue this policy on its own which will set the energy cost out of kilter with the rest of Europe."
And the cost of infrastructure to produce renewable energy is further strangling the economy, he warned.
Workman said: "The total cost for onshore and offshore wind farms as well as solar energy production is already huge. And these costs are being added to because we need back-up energy options for when these unreliable supplies fail."
He said that the costs incurred were not only affecting businesses but consumers too, which creates a further negative impact.
He added: "Every additional £100 that householders have to pay for their gas and electricity is £100 that they are not spending the wider economy on other goods."
BPIF CEO Kathy Woodward agreed with Workman’s stance and said that the BPIF would back CPI in its lobby against the policies.
She said: "We have challenged the BIS on its stance on climate control and aim to ensure that the UK is not at a disadvantage against overseas competition."
Workman urged the government to seek the lowest cost option and provide energy efficiency incentives, criticising George Osborne’s security package for energy intensive industries that amounts to £250m over two years as a "drop in the ocean".
He said: "We desperately need a meaningful manufacturing strategy whose overriding objectives should be security of supply at internationally competitive prices."Tweet
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