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2.4The rising costs of EU energy regulation“This massive tide of red tape also means higher administration andmanufacturing costs which in turn… acts as a gigantic brake upon theentrepreneurial spirit.”– Owner of a medium-sized manufacturing business based in East EnglandIn addition to applying upward pressure on energy prices, EU energy laws also place asignificant regulatory burden on British firms. There is mounting evidence that the UK hasbeen particularly badly hit by the compliance costs that have stemmed from EU energylaws, in part down to the UK’s failure to secure exemptions or tendency to go beyondminimum EU requirements.The consequences of complying with a mounting complex regulatory burden has beennoted by firms with high energy demands:“The EU’s stringent hazard based / precautionary approach to regulation cancause serious implementation problems for companies.”– British Ceramic Confederation 39It is possible to calculate the cost of EU energy laws by looking at detailed HM GovernmentImpact Assessments (IAs). These are official documents produced by departments toaccompany new regulations, stating how far the specific recommended policy meets theGovernment’s objectives and to calculate the potential costs and benefits. While there hasbeen a noted failure by the Government to place all the IAs in one repository (previousattempts to compile such a collection have had notable omissions) it is possible to selecta large sample which includes as many relevant IAs as possible. Our methodology for bothselecting relevant IAs and analysing them can be found in the Appendix.The EU and British Government both claim that these directives bring benefits which oftenoutweigh the costs, but this claim has been widely disputed, not least by Open Europe. 40There is a lot of evidence to show that the benefits have been exaggerated: for example theETS Impact Assessment said the benefits were dependent on a scenario “where EU actionis pivotal in achieving a global deal”. 41 Clearly this was a flawed assumption. In other IAs theprojected benefits are based on an attempt to quantify predicted improvements in theenvironment.By looking at the total cost to British business via these IAs we can start to get an idea of thetotal cost of EU regulations, with a detailed breakdown of the costs and benefits providedin Table 2.Energy Policyand the EU39 British Ceramic Confederation, Response to the call for evidence on the Government’s review of the balance of competences, 17January 2014, p.1.40 Open Europe, Top 100 EU regulations cost the UK economy £27.4 billion a year – and costs outweigh benefits in a quarter of cases,21 October 2013, found at 41 Government Impact Assessment of the EU Climate and Energy package, found at 20
Table 2: Net costs of EU energy directives 42IA TitleTotalCost(lower)TotalCost(upper)TotalBenefits(Lower)TotalBenefits(Upper)NetCosts(Lower)NetCosts(Higher)EU Renewable EnergyDirective £98.9bn £119.1bn £6.2bn £12.4bn £92.7bn £106.6bnEU Climate and Energypackage, the revisedEU Emissions TradingSystem Directive andmeeting the UK nontradedtarget throughUK carbon budgets.Directives concerningthe Internal Market inGas & ElectricityProposal to recast theBasic Safety Standards(96/29)(and otherEuratom) Directives£20.6bn £20.6bn £9.2bn £9.2bn 43 £11.4bn £11.4bn£2.0m £4.5m £0 £0 £2m £4.5m£124.2m £127.8m £0 £0 £124.2m £127.8mIndustrial EmissionsDirective (IED) £3.4m £20.6m £0 £0 £3.4m £20.6mRegulations on thesupervision andcontrol of shipments ofradioactive waste andspent fuelEU requirements forHeating, Cooling andHot Water networks£690,000 £690,000 £0 £0 £690,000 £690,000£0 £0 £0 £0 £0 £0Energy End-Use andServices Directive £377.3m £378.2m £547.8m £551.5m -£170.5m -£173.3mOil Stocking Order£126m £126m £554m £554m -£428m -£428mEnergy ProductsDirective £1.2bn £1.7bn £4.9bn £6.0bn -£3.8bn -£4.4bnPlanning fornationally significantinfrastructure£200m £200m £4bn £5bn -£3.8bn -£4.8bnEnergy Performance ofBuildings Directive £7.1bn £8.6bn £9.9bn £30.3bn -£2.8 bn -£21.7bnTotals £128.7bn £150.7bn £35.4bn £64.1bn £93.2bn £86.6bn42 The following values were determined by adding the relevant Impact Assessments. It is important to note that the UK cango ‘beyond’ minimum EU standards and that the costs and benefits stem not just from the EU but from the decision of UKpolicymakers as well. However it is equally important to remember that the origin of many of these rules and directivesstemmed originally from the EU and that the measures cited were primary introduced to meet EU requirements. IAs alsoprovide a “lower” and “upper” estimate of the costs, both are provided in Table 2.43 Benefits in this IA were based on the assumption 2009 Copenhagen Agreement would result in a global climate changedeal. As the IA points out: “Benefits depend on other’s actions and the emissions concentration trajectory the world ison. High end of range reflects world where EU action is pivotal in achieving a global deal.” Considering the failure of theCopenhagen Summit only lower benefit estimates were counted, not the £242.1 billion higher estimate.21
Page 2: Business for Britain exists to give
Page 9: In a recent letter to the President
Page 14 and 15: in the US. While this would be conc
Page 16 and 17: This divergence is not confined to
Page 18 and 19: Commission has itself acknowledged
Page 22 and 23: It is important to note that many o
Page 24 and 25: 3.1The impact of high energy costs
Page 26 and 27: MetalsTOTAL UK EMPLOYMENT471,000 in
Page 28: Chemicals and chemical productsTOTA
Page 31 and 32: INDUSTRY CASE STUDY 3.1.3Figure 14:
Page 39 and 40: “Energy discussions play a major
Page 41 and 42: were also closing faster than expec
Page 43 and 44: Increased energy dependence3.6Anoth
Page 45 and 46: Despite these problems, the EU’s
Page 47 and 48: 41 per cent of British manufacturer
Page 49 and 50: genuine, efficient and effective in
Page 51 and 52: The EU should also make it clear th
Page 53 and 54: should be considered: were the UK t
Page 55 and 56: Conclusion5The EU’s energy policy
Page 57 and 58: Table 8: All energy Impact Assessme
Page 59 and 60: IA TitleImpact Assessment: Amendmen
Page 61: “Energy Policy and the EU is a ti

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