Carbon Diary: Tough CO2 policies may cost jobs
What would our low carbon economy look like without UK-based steel, cement, glass or brick manufacture? According to a new TUC study, the combined impact of the Government’s climate change policies is imposing significant costs on the UK’s energy intensive industries. Jobs essential to a low carbon future are at risk. Without urgent review, current policies could see some prime UK companies leave the UK for good. Carbon leakage could be the net result – the loss of jobs, investment and our ability to regulate carbon emissions – as competitors with fewer controls on emissions benefit.
These industries matter to the UK: at least one per cent of GDP and 250,000 workers employed in steel, ceramics, cement and lime manufacture, aluminium, basic inorganic chemicals and other industries. They make the products essential to the UK’s low carbon economy, from steel and light weight composites for wind turbines and electric cars, to glass, ceramics and advanced insulating materials for low-energy housing.
The joint TUC- Energy-Intensive Users Group study, based on in-depth research with companies in these sectors, says that the forecast increase in total energy bills, taking electricity, gas and emissions reduction schemes together, could be as high as 141% by 2020. We’ve made these points at the highest levels to BIS and DECC officials. Ministers have the report – we await an opportunity for direct discussions.
But, for the second time in recent weeks, energy secretary Chris Huhne has backed moves for tougher EU targets to cut carbon emissions. A joint article in the FT by Huhne and his French and German counterparts supported lifting the EU target for CO2 emissions reductions from 20% to 30% by 2020. Tough talk. But it’s not clear from their piece whether this is conditional on a global climate change agreement in Cancun this December, binding all developed countries into some form of CO2 regime. Without the cover of a global deal, UK industry will stand exposed to some fierce global CO2 undercutting.
The FT piece acknowledges that, “Some energy-intensive sectors will be exposed to greater costs than the average. We already try to safeguard them through free emissions allowances”, They agree that “alternative measures might be needed … The real threat that such industries face, though, is not carbon prices but collapsing demand in the European construction and infrastructure markets.” Current coalition policies, however, seem to be doing just that.
The Ministrs add that: “One sure way to increase demand for the materials these sectors produce is through incentives to boost investment in large-scale low-carbon infrastructure – a voracious user of steel, cement, aluminum and chemicals. Our industry departments are working to ensure that we manage the transition effectively and maximise opportunities for these sectors.”
That’s not quite how energy intensive UK manufacturers see it. And on this point, it’s all very well for CEOs from 27 of the European Union’s largest companies to write to the FT in support of the three Ministers. But none of those companies – Asda, Kingfisher, nor even Johnson Matthey – are in energy intensive manufacture. Sure, we need to decarbonise, and rapidly. There’s a lot of work out there when we do so. But the question for the intensive energy users, is who will get the work? Is government listening?