Budget 2014: Manufacturers get £7bn package to cut energy costs

Announced as part of the government's 2014 budget, the measures should provide £7billion of savings before the end of the decade. "We need to cut our energy costs by investing in new sources of energy – nuclear, renewables and shale gas and promoting energy efficiency," Osborne commented. "But above all we are going to have a £7billion package to cut energy bills for British manufacturers." The measures include capping the amount of carbon tax paid by electricity generators, the cost of which is passed on to manufacturers and consumers. The rate will now be capped at its 2015/16 rate of £18 per tonne of CO2 for the remainder of the decade. The move could save businesses up to £4 billion by 2018/19 and a further £1.5 billion in 2018/19, the Chancellor said. Other measures to reduce energy costs announced include a £1billion compensation scheme for energy intensive manufactures, to protect them from the cost of green levies, and an exemption from the carbon tax of electricity generated by Combined Heat and Power (CHP) plants on manufacturing sites. "Today's announcements are enormously welcome and send a clear signal that government recognises the serious competitiveness issues at stake from rising energy prices," said Gareth Stace, head of Climate & Environment Policy at the EEF. "The freezing of the Carbon Price Floor will translate into greater clarity for manufacturers' energy bills through to 2020 and provide much needed investment certainty."