The government’s Industrial Decarbonisation Strategy is a somewhat embarrassing document, full of the toe-curling claims to world leadership common to so many announcements across government, all supported with that sleight of hand that we have come to expect.
Between now and the COP26 climate summit in Glasgow in November the British public will be subjected by its own government to a relentless wall-to-wall carpet-bombing of upbeat public relations announcements regarding climate change policy.
Hide where you will, the “bomber will always get through”. Last week it was an eye-catching but probably counterproductively expensive legal requirement that manufacturers of white goods provide spares to extend product lifetimes, this week it is the announcement of an Industrial Decarbonisation Strategy.
The Strategy is a somewhat embarrassing document, full of the toe-curling claims to world leadership common to so many announcements across government, all supported with that sleight of hand that we have come to expect from this particular department since it was created by Gordon Brown as a platform for his protégé Ed Miliband. The departmental culture in BEIS is very strong, and successive ministers have found it hard to change, though one suspects they have not always been trying very hard.
The sly presentation of data is particularly notable here. The strategy document tells us, for example, that the world’s industrial carbon dioxide emissions account for about 25% of the 33 billion tonne global total (2019 data). This fact is then used to suggest by implication the great value of efforts outlined in the Strategy to decarbonize British industry. The UK can, it is claimed, contribute by “leading global innovation efforts”, by working to “support industrial decarbonisation through trade policy”, and ensuring that the UK can “capitalise on the export opportunities of having a world-leading net zero industry”, as well as working to “encourage industrial decarbonisation in developing countries”. Rousing rhetoric.
However, those fine words sound less impressive, and indeed resoundingly empty, when one recalls that the UK’s industrial process emissions amount to about 9.7 million tonnes of carbon dioxide per year (2019 figures), which is a scarcely visible 0.03% of the global total, and only about 3% of the UK’s total.
Though some of the British companies concerned are distinguished, UK industry doesn’t have the bulk, the leverage, the simple physical presence to deliver on any of the world-bestriding promises sketched in the Strategy. It would be harsh to say that UK industry doesn’t matter to global climate change mitigation policy, but it would not be very far from the truth.
Rather than exposing itself and the industries themselves to ridicule with implausible claims to leadership, government would have done better to concentrate on helping these industries to improve their productivity and international competitiveness, to grow and to contribute to the UK’s domestic prosperity. These are modest goals, but achievable and worthwhile.
But why are UK industrial emissions so low? The explanation offered by BEIS is a carefully contrived trap for the unwary and requires careful reading:
Total industry emissions have more than halved over the past 30 years (BEIS, Final UK greenhouse gas emissions national statistics: 1990 to 2018: Supplementary tables, 2020). Analysis by the CCC suggests this can be explained by a combination of the changing structure of the UK’s manufacturing sector, improved energy efficiency, and a shift to lower-carbon fuels. However, emissions reductions in industry are slowing, and more action is needed if we are going to meet our net zero commitments. (p. 25)
An experienced and therefore suspicious reader will know that the phrase “changing structure of the UK’s manufacturing sector” is a paper-thin euphemism, a near-transparent fig-leaf over the nakedness of carbon leakage. Industries in the UK have contracted while their competitors in Asia and particularly in China expand. Production emissions in the UK have fallen, by about 45% since 1990 (BEIS 2019 UK greenhouse gas emissions, provisional figures) but a great deal is to be explained by leakage.
And for industrial process emissions leakage to Asia explains practically all the emissions reduction in the sector, from just over 19 million tonnes a year in 1990 to 9.7 million tonnes a year, with a net effect that almost certainly entails increased total global emissions, since China is coal-fired and thermally less efficient.
The contraction in UK manufacturing is readily visible in the employment figures. In 1990 the UK manufacturing sector, the majority of which is accounted for by heavier industrial process such as those involved in the making of metals, cars and other machinery, plastics, glass, cement, chemicals and petroleum products accounted for about 17% of the UK economy and employed 4.4 million people, some 16% of all jobs.
Figure 1. Employment in the UK manufacturing sector (millions of jobs) 1981 to 2019. Source: ONS, redrawn from the table on page 8 of House of Commons Library, Manufacturing: Statistics and Policy (2020).
But by 2019 it accounted for about 10% of the economy and it employed 2.7 million people, 8% of all jobs. While it is true that this contraction in employment precedes the introduction of climate policies in the 1990s and particularly the early 2000s, the bulk of the recent contraction lies in that period. The signs of an expansion since 2010, though welcome, are painfully slow and insecure, and as BEIS notes in the passage quoted above, they are accompanied by a slowing rate of reduction in emissions, suggesting that a strong recovery of manufacturing will tend to cause emissions to rise once again.
Taking another measure, share of GDP in 2018, it is clear that by international standards UK manufacturing is small. South Korea and China may be exceptional cases, with manufacturing accounting for about 30% of the economy, but the UK was well below the EU 28 average.
Figure 2. Manufacturing as a percentage of Gross Domestic Product in Major OECD Economies, 2018. *=2017 Data; **=2016 data. Source: House of Commons Library, Manufacturing: Statistics and Policy (2020).
Consequently, the emissions reduction resulting from the UK economy’s “changing structure” is nothing to be proud of, and insofar as it is the result of climate policies it is largely caused by sharply rising energy costs to pay for subsidies to renewables (£10 billion a year at present), as Gordon Hughes and I, amongst many other commentators, have pointed out (See Emissions and Economy in the UK: Shining Example or Dismal Lesson?).
The question, therefore, is whether it is possible to produce an industrial renascence in the UK without increasing emissions. The Decarbonisation Strategy suggests that this can be done in a way that will command international respect, but the measures offered are unconvincing. We are told that government will encourage Carbon Capture, Usage and Storage (CCUS) for some 3 million tonnes of carbon dioxide by 2050, about one-third of current emissions, and the adoption of 20 TWh of low carbon fuel supply, largely hydrogen. But this all sounds like decarbonising the status quo at great expense and is very far from a low carbon catalyst for exponential manufacturing growth.
The Strategy also proposes carbon pricing to “send a clear market signal”. That signal could, of course, simply encourage further leakage to China, whose emissions will be allowed to rise to 2030 and will remain high for decades thereafter. The authors of the Strategy are aware of this problem, and the Ministerial foreword promises that “The work we do in the next decade will be essential to ensure industry can flourish during its transition to net zero, without moving emissions and businesses abroad”, but there is no persuasive policy in the 170 pages of text to suggest that the department has any clear and realistic idea of how to prevent further contraction of UK manufacturing as the result of its low carbon policies.
That is not surprising since the overall energy policy, entailing overwhelming dependence on renewables for electricity and the use of hydrogen as an energy carrier for heat and transport is unavoidably of very high cost, and so incompatible with a resurgence of UK manufacturing in a world where the largest manufacturing economies remain, very sensibly, committed to coal and to natural gas.
It is just possible that the UK could achieve relatively low manufacturing emissions and still see substantial growth in the sector, but this would require an immediate reversal of energy policy, reinstating natural gas for process heat and for electricity generation.
However, BEIS is caught in the renewables trap, and cannot even begin to contemplate the necessary reform, let alone plan for it. Instead, they will take the easy course. They will spend taxpayer and consumer funds. In a desperate effort to stimulate growth in the face of high energy costs the government will offer industrial subsidies – this strategy talks about beginning with a £1 billion package – and these subsidies will create temporary flares of activity that will collapse rapidly into ashes. There will then be intense pressure on the government of the day to nationalise the affeced industries, just as there is pressure at the time of the writing for Mr Johnson to nationalise Liberty Steel. The ministerial intentions behind the Industrial Decarbonisation Strategy are doubtless good, but the policies on offer from the department are timid and misconceived.
Dr John Constable: GWPF Energy Editor.