In the briefing, David discusses the Confederation of European Paper Industries (CEPI) annual conference held in Brussels during November 2011, at which it launched a 2050 Roadmap to a low carbon bio-economy.
The report, titled "Unfold the Future" is the first such document and was published in response to the Commission's proposals for an 80% reduction in carbon emissions by 2050 based on 1990 levels. David states that the report should be of particular interest to MPs and officials given the UK's propensity of making such targets mandatory and legally enforceable.
The report's main conclusion is that the Paper Industry is capable of reducing its carbon emissions by between 50% and 60% through investing in existing and emerging technologies over the next two investment cycles (which will take us to 2050). However, it also concludes that to go any further will require the development and installation of technologies which have yet to be invented and that such technologies will need to be accessible at an economic cost by 2030.
David questions if, as targets tighten and penalties for failing to meet those targets become more onerous, we are in danger of encouraging Energy Intensive Industries (EIIs) such as Paper to invest in parts of the world which do not impose such draconian targets on their industries.
He suggests that the UK's competitive position has been significantly worsened by the government's unilateral introduction of a Carbon Floor Price mechanism.
David accepts that the Chancellor has recognised the danger and in his Autumn Statement he announced a package of measures to assist the EIIs. However, the value of the Chancellor's package only amounted to £250m and this needs to be compared to the £bns received by German industry in tax refunds and rebates. He suggests that this is an issue which is worthy of further parliamentary scrutiny.
The Paper Industry - if it has any hope of achieving energy and carbon targets, needs to invest heavily in Good Quality Combined Heat and Power (GQCHP) plants and in biomass plants. Recent actions by government make such huge investments far less likely in the future. It is largely on the back of such investments that the Paper Industry in the UK has managed to reduce the amount of energy required to make a tonne of paper by 40% since 1990, alongside a 42% reduction in carbon emissions - a phenomenal achievement.
David also expressed concern about the effects of the allocation process for the third phase of the European Union's Emissions Trading Scheme (EU ETS) stating that the UK's Paper Industry will be short of 700,000 allowances, which is likely to be far more pro-rata than any other Member State, and to compound the issue the UK will also have to bear the costs associated with the Carbon Floor Price.
In his January briefing, David outlines specific measures that he believes government must consider which include:
- Divert receipts from energy and carbon taxes to support the research into and piloting of the new technologies which will take us to the 2050 80% carbon reduction target.
- Follow the example of Germany and ensure that through a system of tax rebates the EIIs do not suffer the double whammy of direct carbon and indirect carbon costs from the energy companies.
- Review the wisdom of the UK's decision to unilaterally impose a Carbon Floor Price.
- Restore incentives for energy generation from GQCHP and the Renewable Heat Incentive (RHI) tariff for industrial biomass.
- Work towards universal sustainability criteria for large scale biomass development especially in co- generation.
- Ensure that the development of Energy from Waste (EfW) plants does not divert recyclable fibres from the closed loop recycling stream.
- Continue to promote the role of paper-based packaging (produced from sustainable, renewable resources) as a means of minimising food wastage and protecting products from damage.
CPI has been actively involved with MPs, officials and other industries in the Dods UK Manufacturing Dialogue which has resulted in the production of a report titled "Manufacturing a Greater Britain". Amongst its recommendations was one which calls on government to be "Taking stock of energy policy and allowing UK companies room to breathe". It adds that "as a part of this process each unilaterally applied carbon policy in the UK should account for the likely leakage effect from its implementation that will result in investment being relocated abroad."