Energy intensive companies must be found a place in the UK’s green economy
A new report (pdf) for the TUC and Energy Intensive Users Group says that energy intensive companies must innovate to survive, and calls on the government to make sure there is a place for them in its plans for the low carbon economy of the future.
Employers and unions want to support the successful transition of these key industries to a low carbon economy, and as a trade association, we were keen to contribute to this study.
The ceramics sector employs about 20,000 people, and together with its suppliers, generates about £2 billion sales. Our members make long-life (and therefore low life-cycle carbon footprint) construction products such as bricks, tiles, drainage pipes and sanitaryware. They make durable refractories reducing energy use in glass and steel production. Ceramics are used in photovoltaic cell production, solar generators, wind turbines, electricity transport and storage. Ceramics are clearly essential materials for the low carbon transition. There are many world class companies in the UK and some strong exporters.
We wanted to share what the UK industry has achieved already to reduce emissions through energy efficiency improvements, investment, recycling and new product development, and how we are working collaboratively.
The UK has committed to challenging unilateral emissions reductions targets – 80% reduction by 2050 compared with 1990 levels. But what more can be done to reduce emissions if you already have a ‘state-of-the-art’ energy efficient factory?
We’ve worked with manufacturers, technology providers and the Carbon Trust to identify potential medium term technologies that may help reduce emissions in the brick industry – some of which may be transferable to other ceramic sectors. Other energy intensive sectors are taking a similar approach. We may not be able to see all the steps to reduce our emissions in 2050, but we could make some more progress – with the right support for both demonstrator projects and their implementation. But this programme is no longer being supported by DECC and so no funding is available to support the deployment of these innovations.
Chris Huhne has said:
‘As part of the transition to a low carbon economy, we need to ensure that energy intensive industries remain competitive and that we send a clear message that the UK is open for business. Before the end of the year we will be announcing a package of measures for energy intensive businesses whose international competitiveness is most affected by our energy and climate change policies. Rising electricity costs pose a key risk to these sectors which are critical to our growth agenda. We will, therefore, take steps to reduce the impact of government policy on the cost of electricity for these businesses, thereby allowing them to continue to play their part in delivering our green industrial transformation’
This ‘package’ needs to be broad enough to help UK energy intensive businesses survive and adapt to all the challenges of the 2050 targets. It’s not just about mitigating high future unilateral UK electricity costs – as TUC and EIUG’s previous reports have shown in 2010 and 2011, it is the cumulative effect of UK climate change policies which is likely to make many energy intensive manufacturers unprofitable in future. It is essential that climate change and energy policies don’t punish energy efficient intensive sectors. We are also an industry that relies on energy security and price stability to enable future capital investment and innovation to remain in the UK.
As part of the much broader package, the Government needs to recycle some of their green tax receipts to support demonstrator projects for energy efficiency and emission reduction technologies in energy intensive industries. And once technologies are proven, companies need access to finance to implement them. Bearing in mind that payback is often longer than boards and banks require, the Green Investment Bank has a critical role to play here.
Is the UK Government really serious about rebalancing the economy towards manufacturing? Without the right measures in place, including this investment and innovation the UK will merely end up importing these essential products from economies with far less stringent carbon emissions targets.