Energy-intensive industries fear lack of support from UK ministers | Manufacturing sector


Britain’s strategic heavy industries have warned they risk being left dry by a lack of support in the government’s upcoming energy strategy, warning that failure to stick to measures by European countries to cut gas and oil costs electricity would put UK businesses at risk.

The government is expected to present long-awaited proposals this week for a one-off investment drive in nuclear power and possibly more onshore wind and solar power, as well as approval for continued offshore oil and gas exploration. North.

The plan due to be presented by ministers on Thursday has been delayed due to disagreements in the cabinet over which technologies to support, including a fierce battle over new nuclear power plants, with the Treasury reluctant to invest large sums in projects expensive.

An industry source says energy-heavy consumers are “not expecting anything” to help them on gas or electricity, the latter of which can cost up to 60% more than the price paid by competitors Europeans.

Earlier this month Boris Johnson promised action to “meet the needs of British steel, British ceramics and the whole of British industry”, but the Business and Energy Secretary , Kwasi Kwarteng, told MPs last week that the government had already taken steps to support the industry. businesses facing soaring costs.

Amid rising energy bills for strategically important businesses and large manufacturing companies, energy-intensive industries told the Guardian the mixed messages had left them worried they would receive minimal or no help.

Richard Warren, spokesman for trade body UK Steel, said he had “long urged the government to reduce the politically and regulatory controlled elements of electricity bills in line with action taken by governments elsewhere”.

Simply renewing an offset scheme that reimburses industrial plans for the cost of the UK’s emissions trading scheme, but which expired on Friday, would only be a “partial solution”.

UK Steel said the industry “needs full compensation for carbon costs in electricity, increased renewable energy tax relief and similar reductions in network costs, such as those already provided by the governments in France, Germany and the Netherlands”.

Stephen Elliott, chief executive of the Chemical Industries Association, warned that prolonged high energy costs could see factories scale back operations or foreign companies move elsewhere.

“I can’t stand in front of Kwasi Kwarteng and say businesses will close for a week on Thursday, but neither can I say they will be viable and running at full capacity,” he said. “Things are getting tighter as our ability to pass costs on to our customers becomes increasingly difficult.

“Our competitors in continental Europe are increasingly relieved [following the EU’s recent crisis framework enabling more state aid in this area]. If we leave that when a chemical plant closes, restarting those is a very difficult thing to do responsibly from a health and safety perspective.

Over the weekend, Transport Secretary Grant Shapps rejected calls for the UK to consider energy rationing, as ministers explore ways to boost Britain’s resilience to international shocks in oil and gas markets after the Russian invasion of Ukraine led to record cost increases.

Kwarteng told the Sunday Telegraph that nuclear power and offshore wind would play a bigger role in power generation, with up to seven new nuclear power stations by 2050.

Chemical companies use disproportionate amounts of electricity in their processes. Inovyn, a chlorine manufacturer which operates from a plant in Runcorn on the banks of the Mersey, uses as much electricity as the nearby city of Liverpool.

Elliott warned that some foreign-owned companies may reconsider investing in the UK if nothing is done about energy prices.

“If you were to ask chemical investors around the world, there are good reasons to come to the UK, but the negative factor has always been energy costs. So UK sites of overseas parents are still ahead on this front and will increasingly be. Please don’t leave it until we close because by then it will probably be too late.

Elliott wrote to the Chancellor, Rishi Sunak, in March asking for increased support for UK businesses to pay the costs of carbon emissions, highlighting the measures taken by European countries.

The Guardian has contacted the Government Affairs Department for comment.


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