Building Our Low-Carbon Industries
Higher energy costs than competitors. A less business-friendly government policy. Life is hard for the UK’s steel, cement, ceramics and other core industries, who are warning today that thousands of jobs could be at risk without more government support for companies in the energy intensive sector. The 10 basic industries together contribute £95bn a year to the economy. But a new joint report from the TUC and the Energy Intensive Users Group EIUG warns that without Government action, jobs and investment could be lost to overseas competitors.
Building Our Low-Carbon Industries says that in recent years UK heavy industries have significantly improved their energy efficiency and are much greener than many global competitors. But the high cost of energy and the technology needed to move across to a low carbon economy put further green progress at risk without a proper government industrial strategy.
Recent closures of the Rio Tinto Alcan aluminum smelter in the North East and the Thamesteel plant in Kent confirm the risks industry faces : if more EIIs like these disappear, not only will there be a loss of jobs, output and tax revenues, global carbon emissions will also soar as the UK has to import materials from less energy efficient producers.
As Laura blogged yesterday from the ceramics industry, last week’s BIS report on energy prices showed that the UK’s heavy energy users pay double the amount in renewable energy subsidies and greenhouse gas emission standards than competitors in Europe. The soaring cost of energy and the recession confirmed by today’s GDP collapse means glass, refined petroleum and other chemical producers are particularly hit hard, says the TUC/EIUG report.
Firms manufacturing steel, cement, chemicals, paper and other energy intensive products currently directly employ 160,000 people, with an estimated four times that working in the various UK supply chains. They have a combined spending power of £68.6bn, and with an average additional contribution to the economy of £38,000 per employee. It’s not hard to see the significant contribution the energy intensive sector makes to the UK economy, says the report.
EIUG Chair Steve Elliott said: “We have to face facts – Britain’s energy policy isn’t working. We all want to see a greener society, with British industry manufacturing the very products and technologies needed to deliver those improvements. But we can’t do this with one hand tied behind our backs. We want the UK government to look at this report, appreciate the role of unions and employers in working together, and allow our industries to help Britain’s green growth.”
TUC General Secretary Brendan Barber added: “An unforgiving tax environment combined with the failure of the banks to lend means not much money is available to invest in the new industrial processes and technologies like carbon capture and storage – essential developments if an industry which is so key for jobs and for our economy is to survive. Unfortunately ministers seem happy with their hands-off approach. But our energy intensive industries are too important to be allowed to fail. Ministers could learn much from Germany – there the government has created the right economic and political conditions so its high energy users can remain competitive. We urgently need the same approach here.”
Building Our Low-Carbon Industries recommends:
- Ministers should adopt a hands-on approach to EIIs to help prevent the possible closure of factories and heavy plants, and the potential loss of thousands of jobs
- An industrial strategy linked to both energy and environmental policy, which would allow the creation of the world’s most energy efficient EIIs here in the UK
- A change to the rules so that the green investment bank is able to borrow when it becomes operational next year, allowing much-needed funds to be channelled into emerging low-carbon technologies
- The government should share the burden of environmental taxes across the economy, creating a more favourable climate for high energy companies with more tax relief on energy costs.