UK plans low-carbon energy cost breaks for industrials

LONDON Wed Nov 28, 2012 7:06pm EST

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LONDON (Reuters) - Britain plans to exempt industrial energy users from extra costs arising from its electricity market reform following complaints from industry that the costs will kill their international competitiveness.

Details of the plan have not been decided, a spokesman for the energy ministry said. The government will launch a consultation next year.

"It is important that the UK's energy intensive manufacturing industry remains competitive whilst significant investments are made in the UK's energy infrastructure," said Business Secretary Vince Cable.

Businesses with high energy consumption, such as chemicals, steel or cement producers, said they may have to leave the UK if they face higher costs due to climate change policy, to move to countries without such costs or which provide subsidies.

Britain's Energy Bill, which will be introduced to Parliament later on Thursday, aims to introduce contracts for low-carbon power producers that guarantee a minimum electricity price, a cost which will be passed on to suppliers and ultimately to consumers.

The proposal to exempt intensive energy users from this scheme will be subject to European Union state aid approval.

The government also continues to consult on a 250 million pound ($399.58 million) scheme to compensate certain energy intensive users for higher costs incurred due to a carbon tax which will be introduced at 16 pounds per metric tonne of CO2 in April next year.

(Reporting by Karolin Schaps; Editing by Elaine Hardcastle)

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