CO2 the Death of Industry.? THERE Are Genuine Fears That Government Measures to Reduce Carbon Dioxide Emissions Will Lead to the Loss of Thousands of Skilled North East Jobs. PETER McCUSKER Investigates

Article excerpt

Byline: PETER McCUSKER

PIERCING the Northumbrian sky for more than 35 years, the Alcan chimneys are a clear indicator of the region's long-standing reliance on heavy industry. The Lynemouth aluminium plant is the largest private employer in Northumberland with 650 staff and a recent report shows it contributes over pounds 100m to the North East economy. But dark clouds are gathering over its chimneys - and those of many other industrial behemoths in the region - as the latest set of proposals to reduce carbon dioxide (CO) emissions threaten their long-term futures.

In his last Budget, Chancellor George Osborne announced the introduction of a Carbon Floor Price from 2013, saying it would make the United Kingdom the "greenest" country in Europe.

It is designed to penalise CO emitters, with the fines they pay being used to subsidise greener forms of energy such as wind and nuclear.

But as the ramifications of the measures emerged, we reported how the new tax would effectively wipe out the annual pounds 40m profits at the Lynemouth plant. And last month the plant's owners Rio Tinto Alcan announced a review of its operation, with closure being one possible outcome. On Teesside, Tata Steel issued similar warnings and it has now emerged that over 20 of Teesside's chemical and process companies - employing more than 10,000 people between them - have similar concerns. Stan Higgins, chief executive of the North East Processing Cluster, which looks after the interest of over 200 North East chemical and pharmaceutical firms employing 50,000 people, says the measures could wipe out chunks of the sector "We are all trying to lobby the Government to get it to understand the impact of the leading the rest of Europe," he said. "We already have high enough taxation and we have stop this suicidal drive to the be the first country in Europe to introduce these measures. "Investors will be put off coming here and existing companies will move away. It's crazy trying to do this independently, just to try and make us look greener than the rest of Europe.

"All we want is to ensure we have a level playing field. We cannot compete with the other countries in Europe if we take the lead in this way." Tony Sarginson, the North East spokesman for manufacturing body EEF agrees. "This legislation could sound the death knell for thousands of highly-skilled North East jobs," he said. Mr Osborne's Budget baton was picked up and carried further down the low-carbon track in the recent Carbon Budget. Energy Minister Chris Huhne pledged that Britain would halve CO emissions by 2025, well ahead of the rest of the Europe. But this came with a rider as Mr Huhne said: "It is important that we moves at the same speed as Europe." At the same time the Government launched a review on how it can support energy-intensive industries, which is expected to produce recommendations by the end of the year. The London-based Energy Intensive Users Group campaigns for secure industrial UK energy supplies at internationally competitive prices. It is representing many of Teesside's chemical companies in the talks with the Government, including Billingham-based fertiliser manufacturer Growhow. It is one of a number of bodies involved in discussion with the Government on measures to alleviate the CFP penalties on high energy users.

Director Jeremy Nicholson said: "The North East is an area which is potentially vulnerable with industries such as Alcan and the chemical cluster in Teesside. "The CFP will have an profound impact on energy-intensive industries. These are significant additional operating costs for businesses, which are already some of the most energy efficient in the UK. "This is not a trivial matter. Power costs make up some 40% of total costs for a company like Alcan and 70% of costs for companies such as Ineos. "The heavy power users tend to be quite competitive and have already made great strides in keeping their energy bills down. …