4 Conclusion
39. The UK needs to maintain the health of its
refining industry. A mix of domestically refined products and
imports is an important ingredient of energy security and the
UK refining industry is a welcome provider of jobs and tax revenue
for the economy. We agree with witnesses who called for Government
to set a long term framework for the industry to help secure its
future.[86] A
clear Government message and policy can provide oil companies
with the confidence and incentive to continue operating refineries
in the UK, and to continue investing to maintain a viable UK refining
industry in the future. Over time the fuel mix supplied by UK
refineries adapt to respond to demand. This will require investment
in infrastructure, on top of the significant investment the industry
will be required to make to meet legislative and regulatory burdens.
40. As part of its review DECC should:
- Investigate whether the
industry has sufficient access to finance to make strategic investments
beyond legislative compliance requirements;
- Ensure regulations and taxes are not more
onerous in the UK than elsewhere;
- Address elements of taxation and economic
policy that impact UK refiners adversely compared with importers;
and
- Continue urgent requests to the European
Commission in regard to the scope and timing of EU Fitness Checks.
41. The scale of legislative and regulatory burdens
on the industry may undermine long term sustainability. In some
cases investment motivated by compliance with such burdens goes
beyond doing the bare minimum and this may be beneficial. But
while the regulation of the industry for environmental and health
and safety reasons is clearly essential, Government has a responsibility
to ensure that it is also rational, coordinated, and designed
to minimise the cost implications for industry.
42. DECC's strategic objective should be to level
the playing field between domestic refiners and importers, approaching
these sectors as an integrated industry of two parts. It must
also carefully consider the consequential impact of any structural
changes on ancillary industries, which make a valuable contribution
to the economy. We hope that this short report, and the evidence
we are publishing alongside it, will be useful material for DECC
in its review. We look forward to seeing the results of this review
before the end of the year.
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