Memorandum by the British Plastics Federation
(CC65)
The British Plastics Federation wishes to submit
the following evidence to the Committee's Enquiry into the UK
Climate Change Programme.
British Plastics Federation is the trade association
representing manufacturers of plastics raw materials, plastics
semi-finished and finished products and supplier of the machinery
used to manufacture their products.
We wish to make the following points related
to the Climate Change Levy.
1. British Plastics Federation fully supports
the overall environmental objective of reducing the potential
impact of human activity on the climate. However, we do seriously
question the mechanism of a "Climate Change Levy" as
an appropriate mechanism to implement the government's commitments
under the Kyoto Agreement.
2. We believe the Levy has several shortcomings:
— despite government protestations
to the contrary it is hardly likely to be cost neutral to business.
Before the Chancellor's mini-budget statement we estimated that
the cost to the plastics processing industry based on its usage
of electrical energy alone would amount to over £60 million.
Typically a processor would retrieve only about 20 per cent of
his levy payment in NIC contributions.
— the levy is discriminatory against
manufacturing since plastics processing is much less labour intensive
than a service industry and therefore has less potential to reclaim
NIC changes.
— the levy has the potential to damage
the extent and quality of our industry's customer base. Particularly
during the 1980's the UK plastics industry benefited from the
arrival of new customers through the inward investment which arrived
here in the consumer electrical/electronic and automotive industries
in particular from the USA and the Far East. We see the levy as
damaging the attractiveness of the UK as a manufacturing location.
— the plastics industry manufactures
products which save energy in their use. The whole drive to use
plastics is based on their lightweight quality which means energy
used in distribution of products is reduced. We estimate that
100 kgs of plastics in a modern car has replaced 200-300 kgs of
traditional material; a weight saving estimated to reduce fuel
consumption by 750 litres over a typical life span of 150,000
kms. Further, this reduces our consumption by 12 million tonnes
and CO2 emissions by 30 million tonnes per year throughout
Western Europe. In building applications the insulation properties
of plastics for example in wall insulation, contribute to further
energy savings.
It seems inequitable that such factors do not
appear to be taken into account in the levy arrangements.
— the plastics industry emphasises
that it is not an intensive user of energy. The energy content
of its materials and the energy required to operate its manufacturing
processes per unit of output are generally relatively low in relation
to many alternative materials and their manufacture of output
processes. This situation is illustrated by the fact that energy
costs represent only 2 per cent of the turnover of the plastics
processing industry, as revealed by the ETSU Report on behalf
of the DETR, "Industrial Sector Carbon Dioxide Emissions:
Projections and Indicators for the UK, 1990-2020".
Clearly, on this basis, the pursuit of further
efficiencies seriously risks an expenditure of resource in excess
of the benefits to be accrued. This point weights particularly
heavily with the plastics industry since in the processing sector
there are a large number of SMEs. The bureaucracy required to
monitor operations and maintain records in relation to the application
of the Levy would be excessive for firms in the sector.
3. BPF fully supports encouragement for
a more efficient use of energy. Its full engagement and investment
in such government sponsored business efficiency schemes such
as "Partnership in Plastics" and the ETSU Best Practice
schemes testify to this. In our view voluntarism has been shown
to work in our sector through a combination of BPF awareness activities,
innovation by machinery suppliers and competitive pressures between
plastics processors.
Plastics processors electrical energy consumption
reduced over the last decade from 4 per cent of sales turnover
in 1989 to 3 per cent in 1999, a 25 per cent reduction. During
the same period overall business grew from £9.5 billion to
£12 billion, a 26 per cent increase.
4. Our strong recommendation to government
is to focus on sectoral Sustainability Strategies which are seen
as having many positive aspects and to seek improvements in a
broad range of Sustainability indicators. Each industry sector
has its different attributes, its own unique mix of opportunities
to make environmental improvements. To elevate one aspect—energy
use—and to approach it from an apparently coercive standpoint
is not only at odds with the flow of the consultation process
on Sustainable Business, it also seriously risks discrediting
and de-railing the wholly desirable and commendable focus given
to Sustainable Development by UK governments in recent years.
We trust that these points are of value to you
in your deliberations.
We would be available to give oral evidence.
Philip Law,
Public & Industrial Affairs Director
November 1999
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