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EU energy policy ‘hampers UK firms’

The European Union’s energy policy is not working and its rules have played an “increasing” role in “reducing Britain’s industrial output and in destroying jobs” an independent business campaign group has warned.

Rising energy costs threaten up to 1.5 million jobs in the energy intensive sector, with 363,000 of these jobs being at high risk, research by Business for Britain has claimed.

EU energy regulations have cost the UK economy between £86.6 billion and £93.2 billion (net) so far, according to the group’s research of Government Impact Assessments contained in its paper on EU energy policy.

The report entitled “Energy policy and the EU – How a better deal could bring down the cost of energy and save jobs”, analysed the impact of recent EU energy laws and concluded the EU should devise one target for reducing emissions with member states free to determine their own policies to meet this target.

It found energy prices across the EU were among the highest in the developed world, with medium sized industrial consumers in the EU paying around 20% more for electricity than companies in China, approximately 65% more than companies in India and more than twice as much as companies based in the US and Russia.

The paper also argued Europe’s high energy prices “undermine efforts” to combat climate change, warning Europe could become increasingly dependent on imports from other countries, which do not comply with the same high environmental standards as European firms.

In its conclusion the paper states: “This paper does not attempt to claim that the EU is the only reason that energy prices have increased over the last decade, however it is clear that the EU has played a significant and growing role in driving up the cost of energy.

“Restoring the power to block, amend or leave poorly designed EU laws to member states will help address these problems. Such changes will help ensure that future EU energy policies take the needs of British industry into greater consideration.

“In short, renegotiation offers an opportunity for the British Government to create savings, reduce the cost of energy and halt the exodus of manufacturing. It is an opportunity that should be grasped.”

It said that EU policies currently accounted for up to 9% of the cost of energy for Energy Intensive Industries but claimed this could increase to just under 16% by 2030.

The paper added that in 2012-13 alone the National Health Service spent approximately £630 million on energy.

It compared energy bills between continents and found between 2005 and 2012 the gas price index for the EU increased by 35% and the electricity price index by 38%, while in contrast the US gas price fell by 66% and the electricity price by 4% due in part to shale gas.

The report’s co-author, Matthew Elliott, Chief Executive of Business for Britain, said: “The EU’s energy regulations aren’t working and we are already paying the price for their failure. Poorly designed policy and unrealistic targets have conspired to help push up energy bills and put jobs at risk, but failed to open up the market to cross border trade.

“Renegotiation offers a once in a generation opportunity to get a better deal for British businesses and fix the EU’s broken energy policy. It’s time for the Commission to make good on its commitment to subsidiarity and allow member states to decide themselves how they meet EU emissions targets.”

Responding to the paper, a Department of Energy and Climate Change spokeswoman said: “The UK’s energy policies are designed to keep the lights on, cut energy use and reduce polluting emissions, at the lowest possible cost to gas and electricity customers.

“Our move to a low-carbon future is bringing thousands of jobs and investment to every corner of the country. Since 2010, £45 billion has been invested, and by 2020 we expect to see 250,000 jobs supported by the low carbon sector”.

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