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UK electric arc furnaces (EAF) are currently producing around 2.5 million tpy of steel, and around a quarter of their costs are down to electricity. UK pan-industry manufacturers’ association EEF expects the cost of electricity to increase 40% for steelmakers by 2020.
Legislation: Contract for difference, part of the energy bill How does it affect steel manufacturers? An agreed price of producing electricity through renewable and nuclear sources will be guaranteed and funded by the consumer. What mitigation is available? The government plans to exempt energy intensive industries, a consultation will open in 2013.
Legislation: Carbon price floor, part of the energy bill
How does it affect steel manufacturers? This acts as an extra tax on emitting carbon, and is set at £4.94 per tonne of carbon emitted April 2013-2014, and will increase year on year. The tax will affect electricity generators, who will pass on the price to consumers. What mitigation is available? Provisional fund of £100 million to reimburse all energy-intensive industries from 2013-2015. This won’t be enough, according UK pan-industry manufacturing association EEF.
Legislation: EU emissions trading scheme How does it affect steel manufacturers? Europe-wide system for trading emissions, which adds to the cost of electricity across all member states.
What mitigation is available? Provisional £110 million fund to reimburse all energy-intensive industries from 2013-2015. This won’t be enough, according to EEF.
Legislation: Climate Change Levy
How does it affect steel manufacturers? Pre-existing UK legislation taxing manufacturers for use of some fuels.
What mitigation is available? The government is discussing making EAFs exempt. Up until recently mitigated by a 65% reimbursement. It will soon raise to 90% as announced by the chancellor last year.