British Climate Rules More Costly Than in U.S., Germany

U.K. climate policies add more to the cost of power for energy-intensive companies than measures in Germany, France and the U.S., a study commissioned by the government in London found.

Britain’s efforts to slash greenhouse gases added 14.2 percent to electricity prices in 2011, the biggest increment in 11 nations covered in the report by the consulting company ICF International. Other nations covered include Japan, China, India, Turkey, Denmark, Russia and Italy. The U.K. Department for Business, Innovation & Skills released the findings today.

The figures add to pressure from industry groups such as the EEF manufacturing lobby for the government to rein in its drive to stimulate renewable energy. Britain is seeking to slash carbon emissions 50 percent by 2027.

“These figures should come as a wake-up call to the government,” Katja Hall, chief policy director at the Confederation of British Industry, said in an e-mailed statement. “It must help those companies most at risk from higher energy costs and make provisions for them in its forthcoming Energy Bill.”

“These are the companies which produce the materials we need to build technologies, like wind turbines, that will help the U.K. make the transition to a low-carbon economy,” Hall said.

Britain on Nov. 29 said it will provide compensation to help energy-intensive industries such as metals companies and cement factories deal with higher power prices and carbon- dioxide costs and minimize carbon leakage. Those measures weren’t included in today’s study, its authors wrote.

U.S. Cheapest

In China, clean energy policies pushed electricity prices up by 10.2 percent last year, the second biggest gain. Italy and Denmark followed, while the impact in the U.S. was the cheapest, lowering prices by 0.6 percent.

Britain’s policies also are projected to have the greatest impact on power prices later in the decade. It projects the measures will boost prices 18.5 percent in 2015 and by 28.3 percent in 2020.

In the U.S., government policies are forecast to lower power prices for energy-intensive industries in 2015 and 2020, according to the report.

“For the U.S., this is due to the less stringent mandatory energy efficiency and greenhouse gas improvement requirements at national level, as well as the focus on tax credits and other incentives to encourage uptake of energy efficiency and renewable energy,” the report’s authors wrote.

The study, dated July 11, states that “the views expressed within this report are those of the authors and should not be treated as government policy.”

To contact the reporter on this story: Alex Morales in London at amorales2@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net

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