Memorandum by the Wood Panel Industries
Federation (CC80)
I am writing on behalf of our members who manufacture
wood-based panels. Collectively the UK producers manufacture approximately
two-thirds (2.2 million m3) of the total UK consumption of wood
particleboards and about half the UK's consumption of wood fibreboards.
Our industry, which is capital intensive, will
not benefit from the rebate on National Insurance contributions.
We are dismayed with the proposal which would
limit eligibility to enter into a sector agreement within the
levy rebate scheme for intensive energy users to those facilities
that will be Part A permitted under the PPC Regulations.
Under this criterion our members, who are Part
B processors by virtue of the fact that their emissions are essentially
to air, are excluded from the scheme. We strongly maintain that
their use of energy is intensive, indeed maybe more so that a
number of Part A processors.
We understand that the rationale behind restricting
eligibility to the energy intensive industry scheme to Part A
processes is that under the draft PPC Regulations it is only Part
A processes that will have a regulatory requirement to operate
the installation in such a way that "energy is used efficiently".
To distinguish between intensive energy users
and non-intensive users by this means is both arbitrary and artificial
and (therefore irrelevant) in terms of the regulatory approach.
The fact that a process is Part B permitted by virtue of the emissions
being essentially to air does not mean that a Part B processes
is not also energy intensive.
Our members have many combustion installations
with a large range of thermal inputs. The smallest site has a
power consumption of 110GWh/year and the largest is 1,027GWh/year.
Based on average daily production figures we estimate that the
total annual power consumption of the UK manufacturing sector
is at least 4,702GWh/year.
The irony of this eligibility criterion is that
a manufacturing base which supplies two-thirds of the country's
consumption of chipboard is excluded from the energy intensive
user's scheme, whereas an intensive pig or poultry farm is not.
We believe that the eligibility criterion must
reflect total energy consumption.
Para 6.40 of the Pre-budget report states that
the "Government recognises the case for giving special consideration
to the treatment of energy intensive sectors given their high
energy cost and their exposure to international competition".
In 1998 the UK consumption of chipboard and
oriented strand board was approximately 3.3 million m3, of which
1.3 million m3 was imported from about twenty countries. The home
producers' share of the domestic market has increased from 25
per cent to 66 per cent in less that fifteen years as a result
of heavy investment, whilst the market itself as expanded by 50
per cent. In the case of dry process fibreboards, the UK imports
approximately half of the 800,000 m3 annual consumption, and similar
considerations apply proportionately. Clearly the industry does
not wish this increasingly advantageous competitive position to
be jeopardized.
Many of the product ranges produced by the industry
are treated as commodities and as such the profit margins per
unit are extremely low. We work in a global market, which is extremely
price sensitive, and as a result of the levy our members will
be put at a commercial disadvantage to their international competitors.
In common with other sectors our industry has
to invest in environmental control equipment which by its nature
can consume significant amounts of energy in order to comply with
emission control legislation.
We believe that energy inputs into environmental
control equipment which is introduced using the principles of
Best Available Technology as a result of legislation, should be
exempt from the levy otherwise industry is being adversely penalised
for energy consumption which is a direct result of government
legislation but does not in itself assist the manufacturing or
value-adding Economy of the factory in any way.
In its current form our industry will be significantly
disadvantaged against our European and other international competitors
by the levy and so we urge consideration be given to amending
eligibility criteria for intensive energy users to encompass Part
B processes and for exemption to be given to environmental control
equipment.
Alastair F Kerr,
Director-General
November 1999
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