#Budget2015: Staggering rise in our carbon trade deficit
The somewhat dismayed reaction to the Budget from both sides of the steel industry – unions and employers alike – to the meagre £25m compensation for industrial energy costs reflects a harsh truth about the government’s manufacturing strategy. We are shedding jobs, plant and investment at an alarming rate, and running up as a result, an extraordinary 391 million tonne carbon trade deficit. Increasingly, the UK’s most carbon-intensive products, including steel, bricks, cement and other metals, are imported. On average, 1.8 tonnes of CO2 are emitted for every tonne of steel produced. Yet every tonne of imported CO2 points towards a skilled job lost to an overseas manufacturer – and not just China.
Neatly held back until after Budget day, the Defra report, UK’s Carbon Footprint 1997 – 2012, shows that embedded emissions from imports of manufactured goods increased by 41% per cent from 1997 to 2007 . In 2012 we imported 391 million tonnes of CO2.
UK Steel’s Director, Gareth Stace, said yesterday that the Chancellor “will need to go further to fully compensate companies for the disadvantages they face. A healthy domestic steel sector is vital to a strong and stable economy and it must be able to compete fairly in a global market.”
Community, the steel union, said yesterday, “This government has missed its last opportunity to stand up for steel. Bringing forward a fraction of the support for energy intensive industries will just be a blip in the balance sheets of UK steel producers who are struggling to compete with companies in France or Germany. For the past five years, along with major UK steel companies, we have been calling for action.”
So what support was announced, and what is actually paid out? In Budget 2012, the Chancellor claimed that a new £7 billion package would assist our foundation industries with their energy and climate change costs. An average energy intensive user would save “£6.25 million by 2018-19.”
In the last two years, BIS data suggests that payments of about £101 million have been made to 55 firms. That’s fewer than 1% of the entire sector’s 5,500 enterprises. Unlike our key competitors, Germany, France and Italy, our tight eligibility criteria deny support to hundreds of enterprises in entire manufacturing sectors.
Yesterday the Business Secretary appeared to claim that £25m in relief this year was part of compensation for energy intensive industries worth £3 billion. Even that much lower figure is impossible to verify from available data.
This package is funded out of the BIS departmental budget. BIS is expected to complete a four-year, 15% reduction in spending in 2015-16, which as we found out yesterday, will now be followed by the “big dipper” as BIS contributes to a further £13 billion cut in departmental budgets.” Business support grants “could be on the chopping block”, The Guardian has reported today.
As we showed in Walking the carbon tightrope, the UK has some of the most energy efficient industries globally. Yet, as the author of the UK’s Carbon Footprint 1997 – 2012, Prof John Barrett, said, “The government is fully aware that other nations are polluting on our behalf but won’t take full responsibility for the emissions we outsource.” Most of the UK’s most “carbon-intensive” products were imported, which were a “significant additional burden.”