The Confederation of Paper Industries (CPI) has renewed its call on the Government to reverse its policy of cutting carbon allowances for the troubled UK paper sector.
Latest figures for the EU’s Emissions Trading System (ETS) show that 2015 emissions from British mills were 8% lower than those in 2014 and 46% lower than in 2008.
The CPI says that while part of the fall can be attributed to investment in new power generation and improved energy efficiency, much of it is caused by the closure of mills.
Because ETS tackles high carbon use, it contributes to higher costs for energy-intensive industries such as paper. As a result, mills may be granted ‘free’ allocations of carbon allowances to offset the impact of the scheme.
But the CPI says the number of free allowances has been cut so that member states can sell allowances to raise revenue. A compensatory arrangement is in place in the UK, but the CPI says this has had a limited effect and the 2015 figures show that 22 out of 29 UK paper mills were short of free allocations.
It also warns that EU ETS would be changed substantially under European Commission proposals to further reduce free allocations.
CPI director general David Workman says the decline in the sector is such that two-thirds of paper used in the UK is now made elsewhere.
“If the 2050 targets are not to be met by de-industrialisation, then the Government needs to take every opportunity to support industry. The first thing it should do is ensure energy-intensive and trade-exposed industry receives, and continues to receive each year, a full allocation of free allowances set at the level of the best performers in each sector,” he said.