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04/04/16

Race To Go Green Is Killing Britain’s Heavy Industries

Britain Euthanizes Its Steel Industry


Britain’s unilateral climate policies are a green version of what the writer James Bartholomew calls virtue signalling. They make people in suits feel good at conferences, while people in boiler suits at factories lose their jobs. If the government really wants to save energy-intensive industries, it must delay setting new emissions targets for the fifth carbon budget, as the climate change act entitles it to do. --Matt Ridley, The Times, 4 April 2016
 
 
Prime Minister David Cameron promised voters last year that his Conservatives would be the true working-people’s party in Britain. Try telling that to the Welsh steel workers at Port Talbot whom Mr. Cameron’s green-energy policies are about to push out of their jobs. --Editorial, The Wall Street Journal, 1 April 2016
 
 
 
1) Matt Ridley: Race To Go Green Is Killing Britain’s Heavy Industries
The Times, 4 April 2016
 
2) WSJ: Britain Euthanizes Its Steel Industry
The Wall Street Journal, 1 April 2016
 
3) British Government Urged To Scrap ‘Unilateral Climate Policies’
Energy Live News, 31 March 2016
 
4) John Constable: Climate Policies And The Future Of UK Manufacturing
Global Warming Policy Forum, 2 April 2016
 
5) Christopher Booker: We’re Following Germany To An Energy Disaster
The Sunday Telegraph, 3 April 2016
 
6) Trevor Kavanagh: David Cameron Green Taxes Signed Steel Industry’s Death Warrant
The Sun, 4 April 2016
 
7) Robin Pagnamenta: Lethal Cocktail Of Sky-High Electricity Prices And UK CO2 Regulations Are Gradually Killing Heavy Industry
The Times, 4 April 2016
 
8) Dominic Lawson: Cameron's PR Campaign To Make Tories Look Caring Is Causing Untold Misery
Daily Mail, 4 April 2016

 
 
 
The government has been urged to scrap “unilateral climate policies”. The Global Warming Policy Forum (GWPF) has asked the Tory administration to delay the 5th Carbon Budget and get rid of the Carbon Floor Price (CFP). That’s because they are contributing to the crisis of the nation’s steel sector and other energy intensive industries. --Jacqueline Echevarria, Energy Live News, 31 March 2016
 
 
 
The failure of Tata Steel’s fragile UK operations is a salient, early symptom of more general and growing problems in the British economy. Other indicators include falling electricity consumption across all sectors, now at levels not seen since the 1990s and weak, near stagnant performance and falling rates of employment in larger scale manufacturing. The steadily accumulating effects of policy-induced energy cost increases are a significant part of this unfolding story, and, unlike many of the other causes involved, are actually under government control, so can be corrected. But just as the climate policies are slow but sure in the damage they cause, reforms will only bring benefits over the medium term, and so need to be made immediately to avoid serious problems in the next decade. Foresight and patience are both required. --John Constable, Global Warming Policy Forum, 2 April 2016
 
 
A far darker shadow is hanging over Britain than that of the collapse of our steel industry. As she is the sister of a leading figure in the campaign to keep Britain in the EU, we may not be surprised by the warning from Amber Rudd, our Energy and Climate Change Secretary, that “Brexit” would raise our energy bills by £500 million a year. But in making that “half a billion a year” claim, Ms Rudd must hope that we don’t recall those recent figures from the Office for Budget Responsibility projecting that within four years – due entirely to her own Government’s policies – we will be paying £13.6 billion a year in climate change levies alone, up a further  £7.6 billion from the year just ending. --Christopher Booker, The Sunday Telegraph, 3 April 2016
 
 
 
Port Talbot’s prospects look grim. David Cameron has been caught flat-footed. But UK steel has long been in terminal decline. The PM’s problem is that he personally signed the industry’s death warrant by imposing a punitive carbon tax, which makes the energy to produce our steel twice as costly as Germany’s. It began as a barking mad idea from Ed Miliband when he was Labour’s Shadow Energy and Climate Change Secretary. But it was embraced by Mr Cameron in his green period to make the “nasty” Tories look cuddlier — just like his equally daft vow to splurge £12BILLION a year in aid to dodgy foreign tyrants. Both have now blown up in his face. The ring-fenced overseas aid budget — soon to hit an eye-watering £16billion — stands revealed as a cash cow for international corruption. --Trevor Kavanagh, The Sun, 4 April 2016
 
 
 
In Britain, Tata’s plants have been slowly poisoned by a lethal cocktail of sky-high electricity prices and gold-plated UK carbon regulations, which are gradually killing heavy industry. British electricity costs stand at 9.5p per kilowatt hour, compared with 5.1p in the rest of the European Union, according to the Office for National Statistics. In the United States and China, they are even lower, at about 4.3p. It is not only British steel plants that have thrown in the towel. In recent years, aluminium smelters, glassmakers, brickmakers and oil refiners have all blamed high energy costs for the closure of their UK facilities. --Robin Pagnamenta, The Times, 4 April 2016
 
 
The Tory leader gave uncritical support to Ed Miliband’s 2008 Climate Change Act. The only way this could be achieved — as Cameron must have realised — was to ‘punish’ industrial companies for relying on cheap fossil fuels and to make them pay for the subsidies which underpinned wind and solar power. So British manufacturing industry ended up paying twice as much per kilowatt/hour of electricity as its continental rivals, about four times as much as its U.S. competitors — and who knows how much more than in China, which has imposed no such constraints on its manufacturing industries. --Dominic Lawson, Daily Mail, 4 April 2016
 
 
 
 
 
 
1) Matt Ridley: Race To Go Green Is Killing Britain’s Heavy Industries
The Times, 4 April 2016
 
Before Redcar and Port Talbot, remember Lynemouth, where Britain’s last large aluminium smelter closed in 2012. In aluminium, as in steel, China is now by far the largest producer, smelting five times as much as any other continent, let alone country. The chief reason aluminium left (though a small plant survives at Lochaber) was the sky-high electricity prices paid in Britain: electrolysis is how you make aluminium. For extra-large industrial users, British electricity prices are the highest in Europe, twice the average, and far higher than in Asia and America.
 
Britain has the highest electricity prices [for heavy industry] because it has the most draconian climate policies. Despite promises not to do so, the government insists on going faster than other countries in emissions reduction. As Lord Deben, chairman of the Committee on Climate Change, put it recently, apparently without intended irony, the British approach to climate legislation is the envy of most countries in the world. At green conferences maybe.
 
As well as paying huge and growing bills to subsidise those futile playthings of the rich, the wind and solar industries, energy-intensive industry also picks up the cost of the “carbon price floor”, a tax on fossil fuels used to generate electricity, which was introduced in 2013 and doubled last year to £18.08 per tonne of carbon, or more than four times the cost of the European emissions trading scheme, of £4 a tonne. This can have little impact on climate, however, not only because Britain’s emissions are less than 2 per cent of global emissions, but because it merely exports jobs and emissions. […]
 
And third, as the Global Warming Policy Forum points out, climate policies affect the cost of all goods and services purchased by industry, including labour. According to government estimates, by 2030 medium-sized businesses would see prices 114 per cent higher than they would be in the absence of climate policies, and they would need to pass those costs on to customers. […]
 
Lord Deben’s committee is tasked by Ed Miliband’s 2008 Climate Change Act with giving the government impartial advice on how to meet that act’s targets. No other EU member state has yet set a legally binding 2030 target, but the committee announced in November its recommendation for a fifth “carbon budget”, that by 2030, Britain should generate 57 per cent fewer carbon dioxide emissions (from heat, transport, electricity and industry) than in 1990. The government must respond by the end of June.
 
That’s awkward because, as Peter Lilley, MP, has spotted, the deadline is likely to precede any decision by the EU about how to share the burden of meeting the promise it made at the Paris climate conference in December to reduce European emissions by 40 per cent by 2030. If Britain is already committed to reductions of 57 per cent, it can hardly complain if the European Council agrees lesser reductions for other countries, so as to hit the target of 40 per cent for the union as a whole. It is, in effect, a unilateral gift of jobs to other countries — if we stay in the EU.
 
Speaking at the Institute of Public Policy Research shortly before the launch of his committee’s latest report, the impartial Lord Deben was asked about the impact on energy-intensive industry. He replied that “heavy energy users will have to find ways of being less heavy users”. Charming. This they are indeed doing, by putting steelworkers on benefits, where they emit less. But shifting the work to China may actually increase emissions since China gets more of its energy from coal. Lord Deben added, incredibly, that there is “no evidence at all of offshoring due to climate policy”. I wonder if he dares say that in Wales.
 
It is true that the immediate Welsh crisis is caused more by China’s dumping of cheap steel on world markets than by energy costs per se. But this issue is also related to climate policy. China has been massively increasing its emissions in recent years as it expands its heavy industries. Last year’s climate conference in Paris effectively gave a green light for it to continue to do so.
 
Requiring countries to make only non-binding promises of emissions reduction, the Paris agreement let China off even that. As David Campbell, a professor at Lancaster University law school, put it: “The implicit, though categorical enough, permission to increase emissions under Article 4 (7) of the UNFCCC [United Nations Framework Convention on Climate Change] is strengthened by a provision under Article 4 (4) of the Paris Agreement that China and India cannot be required to make reductions.” […]
 
Britain’s unilateral climate policies are a green version of what the writer James Bartholomew calls virtue signalling. They make people in suits feel good at conferences, while people in boiler suits at factories lose their jobs. If the government really wants to save energy-intensive industries, it must delay setting new emissions targets for the fifth carbon budget, as the climate change act entitles it to do.
 
Full post
 
 
2) WSJ: Britain Euthanizes Its Steel Industry
The Wall Street Journal, 1 April 2016
 
Prime Minister David Cameron promised voters last year that his Conservatives would be the true working-people’s party in Britain. Try telling that to the Welsh steel workers at Port Talbot whom Mr. Cameron’s green-energy policies are about to push out of their jobs.



 
The latest blow to Britain’s steel industry comes as India’s Tata Steel said this week it will try to sell its U.K. operations. Tata is clocking losses that may be as high as £1 million ($1.4 million) a day, and now says it has more or less written off the value of its British plants. Thousands of workers will lose their jobs if Tata can’t find a buyer, on top of the thousands left unemployed by other plant closures last year.
 
Britain’s steel industry has been in decline for decades, with employment falling to 24,000 in 2014 from 320,000 in 1971 and steel’s contribution to both employment and total economic output in 2014 shrinking to 0.1%. So you can’t fault Mr. Cameron for resisting rescue attempts such as the renationalization some have called for.
 
Rather, the outrage is that instead of allowing economic nature to take its course and letting workers and steel communities adjust gradually, London insists on hastily euthanizing steel. Witness Mr. Cameron’s green-energy policies since 2010, which have tipped the scales against heavy manufacturing by increasing electricity costs significantly.
 
Those policies include a minimum price for carbon emissions in excess of the going rate in the European Union’s emissions-trading system. Britain also forces utilities to buy ever-increasing amounts of electricity from green generators such as solar and wind, even as those sources can’t make up for generating capacity lost as older plants shut down.
 
High energy costs disproportionately hit extra-large industrial power consumers such as steel mills. These manufacturers paid around 9.55 pence a kilowatt hour for electricity in 2015 compared to as low as 6.7 pence a kilowatt hour when Mr. Cameron took office in 2010. Average electricity prices for all industrial users were 9.38 pence a kilowatt hour in 2014, compared to 4.26 pence in the U.S.
 
No wonder imports from China—often blamed as the chief culprit in the death of British steel—are so much cheaper. High energy costs also put British steel plants at the front of the queue as global firms such as Tata determine where in the world to cut capacity amid a global supply glut. Britain is lucky that those cheap imports at least allow steel-consuming industries to buffer themselves from the full cost of Mr. Cameron’s green follies, which they’d have to bear if they had to buy more expensive, green-powered steel on top of their own electric bills.
 
Britain has done this to itself, despite claims that London could have averted steel closures if only Brussels had imposed heftier duties on Chinese imports or had allowed London to subsidize steel manufacturers to partially offset the higher electricity costs caused by its environmental policies. The way to end today’s steel crisis is to stop this self-inflicted green harm and let the market work in its own way.
 
 
3) British Government Urged To Scrap ‘Unilateral Climate Policies’
Energy Live News, 31 March 2016
 
Jacqueline Echevarria
 
The government has been urged to scrap “unilateral climate policies”. The Global Warming Policy Forum (GWPF) has asked the Tory administration to delay the 5th Carbon Budget and get rid of the Carbon Floor Price (CFP).
 
That’s because they are contributing to the crisis of the nation’s steel sector and other energy intensive industries.
 
According to the GWPF, the country’s CFP is at a floor price of £18 per tonne of CO2 – more than four times higher than the EU’s current carbon price which is less than £4.
 
Along with substantial falls in steel prices, the UK’s uncompetitive electricity prices have been a contributing factor to the closure of steel plants around the country, it added.
 
The GWPF claims it has been consistently warning about the rising policy cost of electricity prices which are expected to increase by 47% by 2020 for large industrial energy consumers.
 
GWPF Director Dr Benny Peiser said: “Energy intensive industries – including UK steel – are facing a growing competitiveness crisis. Britain’s unilateral climate policies are racking up electricity prices and are adding to the cost burden.
 
“In light of the existential crisis of the steel and other energy-intensive industries, the government should delay setting new unilateral CO2 targets and scrap the Carbon Price Floor that are hitting UK manufacturers. They also need to bear down on the growing costs of renewable energy subsidies.”
 
Conservative MP Peter Lilley said the crisis the steel sector is facing in the country is due to “high energy costs“.
 
 
 
4) John Constable: Climate Policies And The Future Of UK Manufacturing

Global Warming Policy Forum, 2 April 2016
 
The failure of Tata Steel’s fragile UK operations is a salient, early symptom of more general and growing problems in the British economy.

Other indicators include falling electricity consumption across all sectors, now at levels not seen since the 1990s (See DECC’s latest update) and weak, near stagnant performance and falling rates of employment in larger scale manufacturing, as highlighted in this week’s Markit/CIPS Manufacturing Purchasing Manager’s Index (PMI).
 
The steadily accumulating effects of policy-induced energy cost increases are a significant part of this unfolding story, and, unlike many of the other causes involved, are actually under government control, so can be corrected. But just as the climate policies are slow but sure in the damage they cause, reforms will only bring benefits over the medium term, and so need to be made immediately to avoid serious problems in the next decade. Foresight and patience are both required.
 
Many commentators on the Tata crisis have noted the impact of energy and climate policies on the steel industry’s viability and competitiveness, and they are right to do so: steel is certainly an industry with an above average sensitivity to energy costs, particularly electricity costs, with in some cases, Tata being one, electricity expenditure equivalent to about 20% of its Gross Value Added (the threshold used by government to determine eligibility for partial relief under the package offered to Energy Intensive Industries). Perhaps about 10% of the steel sector’s total costs are directly related to energy, as compared to around 5% for many other industrial and commercial concerns.
 
But figures of this order, whilst constituting a significant fraction of profits, may not seem overwhelming, and economists have been more or less relaxed about such impacts, expecting efficiency and factor substitution to offset the costs. Similarly, while UK electricity prices certainly appear expensive in an international context (see DECC’s summary), being 7th highest out of the 29 member states in the International Energy Agency (IEA), and 25% above the IEA median, they may not seem sufficiently extreme to figure prominently in Tata Steel’s despair over its UK plant, if compared with, for example, Chinese competition.
 
However, this would be a mistake. Energy, and particularly electricity costs matter a great deal. To see why, we must recall, firstly, that climate policies affect not only the cost of energy bought by a business but also the energy rendered as the many goods and services, including labour, that must also be purchased. Secondly, the cost of energy policies is scheduled to rise sharply by 2020 with still further increases by 2030. In other words, both the present and the future contextual effects of climate policies are far-reaching.
 
The most recent Government estimates permitting understanding of these effects were published in November 2014, in the suspiciously discontinued Estimated Impacts of Energy and Climate Changes Policies on Energy Prices and Bills.

In the absence of any others, we must use these figures, which retain at least indicative value. In 2014 DECC estimated that prices to Energy Intensive users were 26% higher than they would be in the absence of policies. By 2020, in the Low Fossil Fuel price scenario, which now seems more likely than not, a large Energy Intensive Industry (EII) with a full cost relief package would face electricity prices (p/kWh) that are 22% higher than they would be in the absence of policies. Those unable to qualify for relief would see prices 76% higher than they would be without policies. No estimates are available for 2030, perhaps because DECC does not expect there to be any Energy Intensive Industries remaining in that year.
 
The electricity price impacts on other parties trading with EIIs are also large. Medium sized businesses would see prices 77% higher than they would be in the absence of policies in 2020, and 114% higher in 2030. Small sized businesses would see prices 61% higher in 2020 and 95% higher in 2030. Domestic households would see prices 42% higher than they would otherwise be in 2020 and 60% higher in 2030.
 
To these must be added electricity system costs, for grid expansion and management, and in the presence of large renewable fleets these could easily reach totals not much less than the subsidy costs themselves.
 
Officially, DECC believes efficiency measures will result in conservation and offset these increases, but hardly anyone else thinks this is realistic at the scale projected, though price rationing may in fact have some effect in holding back the increase in bills, and is arguably already doing so.
 
Thus, all businesses face significant short term increases in electricity prices, combined with further medium and longer term increases in other input costs as the electricity prices paid by its suppliers, including its workforce, gradually pass through their own share of the climate policy burden. The present is difficult, and the future is very bleak indeed.
 
It is not too late for government to take the hint from the Tata crisis, and review the policies, but correction will be difficult. Many of the instruments, such as the Renewables Obligation and the Feed-in Tariff, have created long-term legal subsidy entitlements, and retrospective cuts will surely be resisted in the courts.
 
Furthermore, even if dramatic reforms are carried through, some degree of economic poisoning will persist for years, while the benefits would only gradually make themselves apparent. One remedy for this would be to drive out the higher cost inputs already entailed by flushing the economy with cheap energy. Fortunately, low cost oil and gas make this a real possibility. The question is whether government has the courage to seize the opportunity before it becomes a desperate necessity.
 
 
 
5) Christopher Booker: We’re Following Germany To An Energy Disaster
The Sunday Telegraph, 3 April 2016
 
Thanks to those rocketing energy costs, many of Germany’s top manufacturing firms, such as Siemens and BASF, are moving their production facilities abroad
 


 
A far darker shadow is hanging over Britain than that of the collapse of our steel industry. As she is the sister of a leading figure in the campaign to keep Britain in the EU, we may not be surprised by the warning from Amber Rudd, our Energy and Climate Change Secretary, that “Brexit” would raise our energy bills by £500 million a year. Her brother Roland, as a key behind-the-scenes strategist for Stronger in Europe, might be described as “the Rudd who doesn’t want us to leave the sinking ship”.
 
But in making that “half a billion a year” claim, Ms Rudd must hope that we don’t recall those recent figures from the Office for Budget Responsibility projecting that within four years – due entirely to her own Government’s policies – we will be paying £13.6 billion a year in climate change levies alone, up a further  £7.6 billion from the year just ending.
 
Even this is only a small part of the disaster Ms Rudd is heading us towards, as she sets about “decarbonising” our economy by closing down all the fossil-fuel power stations which, until recently, were supplying two thirds of all our electricity, in order to rely instead on ever more “renewables” and those new nuclear power stations which simply aren’t getting built. 

  Just where this policy is leading us, as I predicted five years ago, can be seen by looking at the one country still ahead of us in the rush for the cliff edge. A long article in Handelsblatt, Germany’s leading business journal, paints a devastating picture of the chaos now resulting from its pursuit of a “green” energy policy remarkably similar to our own (except that, post-Fukushima, their 17 nuclear power stations have been closing down even faster than ours).
 
Already 77 nuclear and fossil-fuel plants have closed. Their largest power companies, RWE and E.On, have run up debts totalling £43 billion. And after £170 billion was poured into “green” subsidies, giving it the largest number of windmills in Europe (26,000) and causing huge problems for its grid when the wind isn’t blowing, Germany’s electricity bills have soared to the point where last year 350,000 customers were cut off because they couldn’t afford to pay.
 
Thanks to those rocketing energy costs, many of Germany’s top manufacturing firms, such as Siemens and BASF, are moving their production facilities abroad, with the loss of hundreds of thousands of jobs. Those jobs are going not least to the US, which has energy costs less than half of Germany’s (the same effect is seen here in Britain, where our “carbon tax”, crippling energy-intensive industries such as steel, is now four times higher than anywhere else in the world).
 
Full post & comments
 
 
 
 
6) Trevor Kavanagh: David Cameron Signed Steel Industry’s Death Warrant
The Sun, 4 April 2016
 
[…] Port Talbot’s prospects look grim. David Cameron has been caught flat-footed. But UK steel has long been in terminal decline.
 
Under EU rules we can’t prop it up with taxpayers’ money and we can’t insist British firms use British steel.
 
The PM’s problem is that he personally signed the industry’s death warrant by imposing a punitive carbon tax, which makes the energy to produce our steel twice as costly as Germany’s.
 
It began as a barking mad idea from Ed Miliband when he was Labour’s Shadow Energy and Climate Change Secretary.
 
But it was embraced by Mr Cameron in his green period to make the “nasty” Tories look cuddlier — just like his equally daft vow to splurge £12BILLION a year in aid to dodgy foreign tyrants.
 
Both have now blown up in his face. The ring-fenced overseas aid budget — soon to hit an eye-watering £16billion — stands revealed as a cash cow for international corruption.
 
Full post
 
 
7) Robin Pagnamenta: Lethal Cocktail Of Sky-High Electricity Prices And UK CO2 Regulations Are Gradually Killing Heavy Industry
The Times, 4 April 2016
 
[…] In Britain, Tata’s plants have been slowly poisoned by a lethal cocktail of sky-high electricity prices and gold-plated UK carbon regulations, which are gradually killing heavy industry. British electricity costs stand at 9.5p per kilowatt hour, compared with 5.1p in the rest of the European Union, according to the Office for National Statistics. In the United States and China, they are even lower, at about 4.3p.
 
A £390 million tax exemption for big industrial energy users announced in the recent budget is unlikely to be of much use to companies such as Tata, whose European steel operation alone has suffered impairments of £2 billion over the past five years. It is no surprise, then, that profitable UK steelmaking has become an oxymoron that Tata and others are eager to avoid.
 
It is not only British steel plants that have thrown in the towel. In recent years, aluminium smelters, glassmakers, brickmakers and oil refiners have all blamed high energy costs for the closure of their UK facilities.
 
It may be cold comfort for the 15,000 Tata workers in the UK, but there is at least one silver lining to this sorry tale: the slow-motion collapse of British heavy industry will at least reduce the chances of an electricity supply crunch over the next few winters.
 
Full post
 
 
 
8) Dominic Lawson: Cameron's PR Campaign To Make Tories Look Caring Is Causing Untold Misery
Daily Mail, 4 April 2016



 
[…] When David Cameron became leader of the party in 2005, his chief objective was — in the phrase then fashionable among his advisers — to ‘detoxify the Conservative brand’. That’s right, brand — like soap powder. Cameron would wash its image whiter than white.
 
So, in 2006, he travelled — official photographer in tow — to the Arctic: his photo-op with the huskies was designed to demonstrate that the new caring Conservatives were committed to ‘saving the planet from climate change’. Simultaneously, Cameron changed the party’s logo from a blue torch to a green tree.
 
Consistent with this, the Tory leader gave uncritical support to Ed Miliband’s 2008 Climate Change Act — indeed, he imposed a three-line whip on his MPs to support this measure that would make the UK a ‘world leader in reducing CO2 emissions’: the Act mandated an 80 per cent cut in our emissions, way beyond anything imposed by any other country.
 
The only way this could be achieved — as Cameron must have realised — was to ‘punish’ industrial companies for relying on cheap fossil fuels and to make them pay for the subsidies which underpinned wind and solar power.
 
So British manufacturing industry ended up paying twice as much per kilowatt/hour of electricity as its continental rivals, about four times as much as its U.S. competitors — and who knows how much more than in China, which has imposed no such constraints on its manufacturing industries.
 
Cheap Chinese steel is a large part of the reason Tata is preparing to shut down its blast furnace in Port Talbot — which would destroy the jobs of 5,000 Welsh steelworkers at a stroke.
 
But why is Tata not also threatening to close its Dutch and German steel operations, equally part of its European business? It is because those countries have not imposed a penal ‘carbon floor price’ on their industries.
 
Full post
 
 
 
 
 
 
 
 
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