Manufacturers have seen their gas and energy prices quadruple and triple respectively over the last year and their Carbon Compliance costs increase from lows of GBP 16 in 2020 to a high point of over GBP 80 per allowance in 2021.
Glass is a relatively low-price material and due to high sunk costs, tight margins and limited ability to change operations in the short term, the rapid increase in energy prices means that production costs will soon outstrip the product value. UK companies are also paying more for their energy than those in the EU, putting them at a competitive disadvantage.
This is continuing to put pressure on the glass supply chain as costs are passed on, which will ultimately impact the consumer with rising costs associated with glass products such as food and drink packaging and glazing. This may mean popular consumer products such as UK produced jams, pasta sauces, beers and spirits become too expensive, leading to the UK seeing increased imports from EU countries, Turkey, Oman, Egypt and Russia in the long-term, where energy and carbon costs are significantly lower than the UK.
Dave Dalton, British Glass CEO, said, “Government is failing to grasp the severity of the issue. There is a considerable threat to the glass sector that will lead to a lack of inward investment, a loss of employment in some of the most deprived areas of Northern England and missed decarbonisation targets with an added increase of imports from countries where there is little or no control over carbon emissions, leading to a net increase of CO2.
“Despite assurances from the Secretary of State, there has been nothing done to support manufacturers through this crisis and coupled with the disparity between carbon prices in the UK and the EU putting UK manufacturers at a competitive disadvantage, there is a very real possibility that businesses will no longer be competitive if the lack of support from government continues.
“We are not asking for a bailout using taxpayers’ money. We are simply asking for policy to support the longevity of the industry and create a level playing field for UK manufacturers alongside international competitors. If this does not happen companies will be forced to pass on the costs to customers and consumers further fueling inflation and the cost of living.
“Manufacturers cannot continue to cover these costs or attempt to pass them onto customers and also be expected to meet climate targets, maintain much needed jobs in underprivileged areas of the country and still be a key contributor to the UK economy.
“Further delay will be detrimental to our sector, and we are calling on government to open an immediate dialogue and take real action now.”