Climate change policies are pushing UK energy prices above those in Germany and that the gap is set to widen further in 2013 when the government introduces the unilateral Carbon Price Floor according to EEF analysis.
UK energy prices for energy-intensive manufacturers were approximately 10% higher than Germany in 2010 and will be 15% higher by 2013, the EEF data showed.
Germany's most energy intensive industries receive a 98.5% rebate on the country's renewable energy levy while their UK equivalents receive no relief, the EEF said.
EEF chief executive, Terry Scuoler said the analysis demonstrated how the UK's industrial competitiveness was being damaged and urged the government to bring forward a package of measures to compensate those industries most affected by its climate change policies.
He said: "The chancellor recently spoke about environmental laws and regulations piling costs on the energy bills of households and companies. Our analysis demonstrates how this is damaging our industrial competitiveness. By 2013 our energy-intensive manufacturers will be paying 15% more than their competitors In Germany.
Scuoler added: "As a first step, the government must bring forward a package of measures to compensate those industries most affected by its climate change policies. Failure to do so will send a strongly negative signal to manufacturers who are looking at whether to make their next major investment in the UK."
The Carbon Price Floor (CPF) - will cost manufacturing £250m a year when it is introduced in 2013, rising to £1.2bbn by 2020 according to the EEF.