The Confederation of Paper Industries (CPI) has warned that four mills and 13 paper-making machines will close in the UK this year.
It said this equated to 20% of the nation’s total output, or one million tonnes a year, meaning the UK risks being the world’s largest importer of paper.
Two UK taxes are causing the cost of renewable energy generation to rise despite global prices for fossil fuels falling in recent years, according to a CPI briefing for MPs.
The carbon price floor (CPF), which applies to energy-intensive industries (EIIs), increased this year from £9.55 per tonne of carbon emitted to £18.08, and is not applied anywhere else in Europe, according to the briefing.
Additionally, the carbon reduction commitment (CRC) for non-EII sectors rose to £16.50 per tonne and is having a similar effect on the competitiveness of many paper converters, according to the briefing.
CPI director general David Workman has called for the CPF and CRC to be abandoned “as a matter of urgency”, along with compensation measures to offset the renewables obligation and feed-in tariff costs.
Workman said: “The combination of the strength of sterling and very high energy and carbon costs has had a devastating effect on the international competitiveness of several energy-intensive sectors, including paper.
“Unless the Government takes urgent action to rectify this situation we are likely to see further declines in these sectors, with consequent loss of highly skilled and well-paid jobs.
“We cannot expect UK EIIs to invest here unless they are able to compete on a level playing field with the rest of the world.”
CPI research during the summer found that UK paper mills were paying almost twice the amount for power than facilities in Germany or France. UK industrial gas prices are twice the level paid by paper makers in North America, which the CPI fears may attract investment.
DS Smith recently announced it was consulting on the closure of its 250-year-old Wansbrough paper mill (pictured) in Somerset.
Mills operated by Aylesford Newsprint in Kent and Tullis Russell Papermakers in Fife also closed this year. In September, brokerage business Failand Paper Services of Bristol called in administrators with the owner saying he saw little prospect of the business carrying on.