Weekly column by EUA's Chief Executive Mike Foster
Monday 4th April 2016
There is a sad inevitability about the steel industry crisis that has filled TV screens over the past week. I suspect we all know how this will end, and it will not be good news for the thousands of workers employed in the industry. Arguably, it is not their fault. No doubt, the blame game will be played out in the public debate but that will prove of little comfort to those who risk losing their livelihoods.
It is a matter of fact though, that energy prices in the UK are higher than in many competitor countries, including China. Again, a matter of fact that those higher prices are partly due to “green levies”. Two questions spring to mind, is the UK the only country whose industry is burdened with these costs and why?
Any economist will confirm that the price mechanism acts to match demand with supply. The higher the price, the lower the demand, ‘simples’. So a tax or levy applied solely on UK energy costs – to fund renewables or anything else frankly – will make production costs and hence prices higher than the competition. If there was an internationally agreed levy, then the market is not affected, but what the UK is doing is driving away so called “dirty” industries by making them uncompetitive.
In doing so, they’re saving the planet though aren’t they? Well probably not. If the UK is consuming cleaner but more expensive energy compared to dirty but cheap energy used by countries like China, then the planet isn’t benefitting. In fact, just the opposite.
My fear is that well-meaning environmental policies (I suspect by accident not design) are making British industry redundant in the quest to be a world leader in tackling climate change, whilst global emissions are forced up and livelihoods lost. Who gains by that?
Mike Foster CE
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