Dominic Lawson: The Party Consensus On Industrial Sabotage

  • Date: 05/04/16
  • Dominic Lawson, The Sunday Times

As the prospect of thousands of steelworkers heading for the jobcentre comes closer, take a bow, David Cameron, Ed Miliband. In fact, congratulations on a brilliant job of industrial sabotage to all members of parliament who voted for unilateral decarbonisation.

This is baffling. The entire British political class is on the point of achieving one of the few objectives behind which it has been united. Yet no one seems prepared to take the credit.

The threatened closure of most, if not all, of the British steel industry is a predictable result of the decision by all the main political parties to give the utmost priority to reducing CO2 emissions.

Few businesses are as energy-intensive as steel manufacture. And none more so than the colossal blast furnace plant at Port Talbot, the heart of Tata Steel’s UK operations. Its energy demands are partly met by generating gas through the burning of coke and iron ore. This is highly efficient, but also emits CO2 at a prodigious rate. A Very Bad Thing.

Never mind: our government is close to stopping this wickedness by producing energy policies consistent with the Climate Change Act of 2008, which mandated an 80% reduction in the country’s CO2 emissions. As a result of deliberate state intervention, prices of electricity for British industrial users are twice the EU average and far higher than those paid by US firms powered by dirt-cheap shale gas — oh, those irrational Americans. […]

The most remarkable aspect of this cross-party consensus was that it advocated a policy of unilateral carbon emission reductions. This was called “leading the world in fighting climate change”. The Foreign Office liked this especially: it was thought to make us look extremely virtuous on the world stage. Funnily enough, I have never found myself being slapped on the back when abroad, or congratulated by Chinese or American people for our country’s high moral tone; but I suppose they must be grateful we have been outsourcing our manufacturing to their industrial heartlands.

Actually, they should not thank me, as I have been one of those who could never work out why a country generating less than 2% of the world’s CO2 emissions should risk what was left of its industrial base in the quixotic belief that if we set the highest targets for reducing our emissions, the rest of the world would admiringly match us.

In 2009, after the Welsh aluminium smelting industry closed down, I argued that the steel industries of the UK would follow suit as the penalties for CO2 emissions bit further: “It may well be that the steel mills will become unable to compete globally [but] deliberately to make them uncompetitive is industrial vandalism.” I spoke then to Jeremy Nicholson, the director of the Energy Intensive Users Group (EIUG), representing businesses employing 200,000 people — and 800,000 or so indirectly through the supply chain. I quoted him at the time: “Outsourcing our emissions is not a solution to a global problem. Politicians need to understand that unilateral action will come at a terrible cost in terms of UK manufacturing jobs, investment and export revenue, for no discernible environmental gain.” […]

Why, though, does it show no sign of pulling the shutters down on its vast steelworks in the Dutch town of Ijmuiden (which is under exactly the same pressure from the glut of steel emanating from China)? Here’s a clue. The cost of electricity for Dutch industrial users is roughly half that paid by identical businesses in the UK, and Holland does not have the equivalent of Lord Deben, who as the evangelically environmentalist chairman of the Committee on Climate Change “advises” the British government on how to set electricity prices to meet the demands of the Climate Change Act.

It would be possible for the government to put much more of the burden of increased electricity costs onto domestic consumers, and thus shield industrial users (as the Germans do). But if the effect of that were to keep the steel blast furnaces in business, we would not see the reduction in CO2 emissions that the policy is specifically designed to bring about.

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