British Steel’s Green Death

steel's deathThe loss of so many jobs in the UK steel industry in such a short period of time is nothing short of a tragedy. British steelmakers pay nearly twice as much for their electricity as their German and French rivals. Dealing with this would require the UK government to row back on the green policies that slowly ratcheted up energy bills for British businesses. A couple of years ago, I asked the head of a large US fund management company for his opinion on the biggest risk Europe faced. I expected him to say Greece, or the euro, or something about our ageing populations. But he instantly alighted on European energy policy, labelling it “nuts”. Those workers in Scunthorpe and Redcar who have recently been laid off would likely agree. –Ben Wright, The Daily Telegraph, 20 October 2015

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. This would be futile. Worse, it would be missing the most important point. We have done this to ourselves: or, more precisely, it is British government which has been driving the final nail into the coffin of our own steel industry. –Dominic Lawson, Daily Mail, 19 October 2015

Energy costs alone represent up to 40% of the total costs of a steel plant in Europe, significantly more than in the USA, Russia, the Middle East or China. This is driving global steel investment outside the EU, where there are no such targets or green taxation to reduce CO2 emissions. The European steel industry employs 335,000 people. ArcelorMittal Europe estimates that their European steelmaking operations are at a $1 billion energy cost disadvantage compared with their counterparts in the USA. Aditya Mittal, its CEO, has recently warned that the cost of implementing the EU’s 2030 climate targets unilaterally would make European steelmaking unviable. He estimates that the additional costs for the steel sector between 2020 and 2030 would be around ‚Ǩ58 billion ($73.76 bn) of which ArcelorMittal would have to bear ‚Ǩ20 billion, or an average of ‚Ǩ2 billion a year, far exceeding ArcelorMittal’s European profits. While global steel output is increasing, European steel production is in steep decline and continues to lose competitiveness. The EU’s share of global steel production has more than halved in recent years, falling from 22% in 2001 to 10% in 2013. –Benny Peiser, Testimony to the US Senate, Washington DC, 2 December 2014

Another 2,000 lost jobs are collateral damage in the war on carbon dioxide. Pin the blame on David Cameron’s climate policy. Belatedly recognizing what an economy-killer the carbon-price floor is, Mr. Cameron’s government last year capped the additional amount emitters would have to pay at ¬£18 per metric ton of emissions at least until 2020. That’s progress, but not nearly enough to save jobs. A better idea would be to scrap Britain’s war on carbon entirely. As the science surrounding climate change becomes ever more contentious—and as green industries chronically fall short of the job creation and growth they promise—the costs of anticarbon policies grow and grow, not least for those 2,000 workers at Redcar. –Editorial, The Wall Street Journal, 6 October 2015

Karl-Ulrich K√∂hler, the European head of the Indian industry giants Tata Steel, predicts an exodus of the European steel industry if the EU emissions trade proposals are implement. “The proposals represent a risk for the steel production in Europe.” This model would be leading to a shrinking process in the industry. After all, all competitors in Asia and America would enjoy much better conditions. “When I talk about emissions trading in Europe before the Tata board in India, it is very difficult for the colleagues there to understand why Europe’s politicians undermine the competitiveness of their steelmakers”, says K√∂hler. –Carsten Dierig, Die Welt, 29 July 2015

The Global Warming Policy Forum is calling on the Government to scrap Britain’s unilateral Carbon Floor Price which is contributing to the crisis of UK steel and other energy intensive industries. The GWPF 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. The UK’s extra large users of electricity are already paying nearly twice as much for power as the EU average. The Government should consider scrapping the Carbon Price Floor that is hitting UK manufacturers. They also need to bear down on the growing costs of renewable energy subsidies. —Global Warming Policy Forum