VINACHEM

The Chemical Industries Association is calling for continued support from Government for UK firms that are struggling to compete with producers from other regions with lower power prices, less of a carbon price challenge and more supportive investement conditions.

The UK Government will scale back support for businesses from April, with energy and trade intensive businesses at risk of receiving less than half the energy cost discount compared to that through the current Energy Bill Relief Scheme (EBRS).

As this has weighed heavily on the public purse, a £5.5bn cap will be set on the new the Energy Bill Discount Scheme (EBDS) over 12 months from 1 April.

Although warmer temperatures and a lull in energy demand have led to some softening in energy prices, CIA CEO Steve Elliott is looking to work with the Government and energy suppliers over the coming weeks on the EBDS.

“Businesses are still facing energy prices that are four or five times higher than they were in early 2021, they see their German and French competitors receiving more generous relief and the post-March support arrangements leave many questions in terms of eligibility and administration,” said Elliott.

“We would also urge ongoing scrutiny of UK energy costs, so that more supportive measures might be rapidly implemented should we face further political, economic, or meteorological pressures on energy security and cost during 2023.”

European players are already at a competitive disadvantage compared to the US, where energy prices are lower, policies support further investment in the sector, and there is no challenge in the way of carbon pricing.

The EBRS was introduced a temporary six-month scheme to help commercial consumers cope with escalating energy costs, which spiked following Russia’s invasion of Ukraine.

“The significant intervention was brought in to help keep people in jobs, prevent unnecessary insolvencies and afford breathing space for businesses to identify measures that protect themselves from high energy costs,” the official Government advice reads.

“The government has been clear that such levels of support were time-limited and intended as a bridge to allow businesses to adapt.”

“Looking ahead we still need Government to take action on its commitments made as part of the Energy Security Strategy including addressing long standing energy policy costs which continue to be one of the highest across Europe,” added Elliott.

The Energy Security Strategy was published last year to build on domestic UK energy supply, focusing on low carbon alternatives in a move away from dependency on Russian oil and coal imports at the end of 2022, and Russian gas “as soon as possible thereafter”.  – ICIS –