It is British climate policy which has been driving the final nail into the coffin of our own steel industry.
R.I.P. the British steel industry, once the mighty engine of this country’s industrial base. Over the past week, the blast furnaces and coke ovens at Redcar have been closed, with a loss of more than 2,000 jobs.
Now Tata Steel is to cut almost half its workforce of 4,000 at its Scunthorpe plant, and there is similar bad news to come for its workforce in Scotland and Wales.
The fact that this coincides with the state visit this week of the Chinese President Xi Jinping will lead many to say we should use the opportunity to complain to the leader of the world’s most populous nation about its saturation of the global market with ever-increasing volumes of steel.
It is true that Chinese exports have pushed down the price of steel, blowing a hole in the business plans of all other steel producers. But the issue is not just about prices, it is also about costs. And successive British governments have quite deliberately driven up the single most significant cost for steel producers, with their giant blast furnaces: energy.
This stems in large part from one of the last decisions made by Tony Blair as prime minister, when in 2007 he signed up this country to obtaining 15 per cent of all its energy from ‘renewable sources’ — wind and solar — by 2020.
According to the then chief scientific adviser to the government, Sir David King, Blair was supposed to limit our pledge to ‘electricity’, not energy as a whole, but there were ‘very tired people in the meeting … people just took their eye of the ball’. What a shameful admission.
The result is not just that household bills must be at least 15 per cent supplied by expensive and inefficient wind and solar power (what do we do when it isn’t sunny or blowing a gale?), so must high-intensity users of energy such as steel producers.
Over and above that self-imposition, the UK has, uniquely, set a ‘carbon price floor’. This — a means of meeting the targets of the Climate Change Act implemented under Gordon Brown and supported with a three-line whip on Tory MPs by the then opposition leader David ‘Green’ Cameron — means that even if the cost of carbon-based energy falls, our big industrial users are not allowed to get full benefit.
I wrote about all this in 2009, and the consequences it would have for the steel industries of England and Wales: ‘It may well be that they will soon become unable to compete globally, even at current domestic energy prices; but deliberately to make them uncompetitive is industrial vandalism.’
I spoke back then to Jeremy Nicholson, the director of the Energy Intensive Users Group, which represents industries employing 200,000 people in the UK — and an estimated 800,000 indirectly through the supply chain.
He was especially exasperated by the fact that resulting closures of British industrial plants would not even have the effect of reducing global CO2 emissions: ‘A future administration will have to say in public what ministers and their officials already admit in private, that their renewables target is neither practical nor affordable.
Nicholson overestimated the wisdom of a ‘future administration’: neither the Coalition government, nor the new all-Conservative one, has taken a single step back from the precipice.
According to the official statistical body, Eurostat, far and away the highest energy costs in the EU among ‘extra-large users’ are paid by British firms. In 2014, ours were paying on average just over 9p per Kilowatt hour. This is more than twice as much as France (4.12p per KwH) and almost twice as much as Germany (4.81p per KwH). This is nothing less than negative state aid to British manufacturing industry.
What has the Department for Business been doing about this? During the Coalition years it commissioned a report which set out the problem. Chris Huhne, the then climate change secretary — before he was jailed — tried to stop it being published. This renewable energy fanatic needn’t have worried. Nothing was done.
Now the Department of Business says it is trying to get European Commission approval of a plan to compensate steel and other high-energy users for up to 85 per cent of the cost of being forced to use ‘renewables’.
Even if it is successful, that will come too late for thousands of steel-workers.
The MP whose constituency contains Tata’s Port Talbot steelworks, Stephen Kinnock, has now pleaded with the Government to get the industry ‘immediate respite from the crippling energy costs that it currently faces’.
Yet only last year, Kinnock wrote an article in the Guardian condemning those who questioned as quixotic policies designed to limit climate change, calling instead for ‘a green growth revolution’.
I’m sorry, Mr Kinnock, but your constituents working in the Port Talbot steelworks might soon be the collateral damage of your ‘green revolution’.