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Steel Industry Being Crucified By High Energy Costs, Admits Claire Perry

January 12, 2019

By Paul Homewood


h/t Dennis Ambler


From questions in Parliament this week:





This rather sums up what a nonsense our energy policy has become.

It is frankly shocking that steel producers, and presumably other energy intensive industries, have been paying twice the price for electricity than competitors in France and Germany. Of course, it must be pointed out that in Germany it is domestic users who end up paying the bill.

Claire Perry’s comment about exemptions from the costs of the Contracts for Difference scheme does not frankly add up to much. CfDs only account for 15% of green levies, so steel producers will still need to pay for the other 85%.

As for £315m being thrown at decarbonisation projects. it is not clear how this will save industry any money at all. More likely it will add to costs unnecessarily.

Meanwhile, it is other electricity users and taxpayers in general who will end up paying for relief packages and exemptions.

Being “committed to minimising energy costs” is one thing. Actually doing something about it is another, which seems to be beyond Claire Perry’s ability.

Would it not have been easier to put a stop to obscene green subsidies in the first place?

  1. Jack Broughton permalink
    January 12, 2019 11:58 am

    The steel industry has long been a victim of the UK policy of high energy costs for industry, while Germany, Italy, Spain and Holland all effectively subsidised industrial electricity, and consequently kept their steel industries..

    How has this unfair subsidy never been part of the unfair trading considerations of the EU: yet apparently, paying our coal fired power stations to remain available to the grid is an unfair subsidy. You couldn’t make it up!

    • Ben Vorlich permalink
      January 12, 2019 12:19 pm

      Did the UK government ever make a formal complaint about these subsidies, i don’t know but wouldn’t be surprised if they hadn’t. UK governments of all political parties seem incapable of grasping the fact that most governments actively push the rules of trade agreements to and beyond their limit. They are particularly happy when a faceless third party can be blamed and inaction can continue unabated.

      • Gerry, England permalink
        January 12, 2019 1:16 pm

        The UK government and the MPs understand very little about how this country interacts with the EU as has been shown by the mass ignorance over Brexit.

      • MrGrimNasty permalink
        January 12, 2019 7:18 pm

        I don’t want to fan the red-mist of Brexit, but the EU has a long history of undermining British manufacturing and industry, the obsession with climate policy being only one – cheap loans to move the Transit production to Turkey, money to China to subsidize their steel production etc.

        It is utterly bizarre that the media is obsessed with the economic damage of Brexit (especially a no deal), yet any theoretical damage is tiny compared to the sure damage that will be done by the environmental policy road we are currently travelling.

    • January 13, 2019 9:13 am

      The UK, and in particular the Civil Service, has never grasped just how political the EU is. We treat the Commission as if it is some neutral, technocratic body devoted to truth and justice (our civil servants wet dream) and so we get legged over time after time.

      The Cimmussion is run by politicians pursuing their political agenda, but the UK always pretends it is not.

  2. Lezz permalink
    January 12, 2019 12:06 pm

    When all our steel jobs have gone, they’ll blame it on Brexit. The clowns are still running the circus.

    • dave permalink
      January 12, 2019 8:23 pm

      “The clowns are still running the circus.”

      It used to be the chimps. They were better.

  3. Ken Pollock permalink
    January 12, 2019 12:27 pm

    It looks as if the steel industry could go the way of the cement and aluminium industries, already priced out of the UK as a manufacturing base. Only Fort William, using hydro power, can still make aluminium here.
    The key point is that we still need the two products, as with steel, and the same amount of energy is used making them overseas, with just the same amount of CO2 produced. It is just that we then end up buying the stuff at a higher price and give overseas companies the chance to make money at our expense.
    Net benefit to climate change: zero.
    Net benefit to the UK economy: strongly negative
    Net benefit to the UK government: positive, as they can say they are combating climate change, and they have not realised they are doing nothing of the sort.
    It is enough to make you despair of our leadership – and I am afraid the Labour party, Lib Dems and certainly the Greens would be just as bad!

    • Gerry, England permalink
      January 12, 2019 1:23 pm

      Aluminium smelting needs a 100% reliable energy supply which is why the Anglesey plant closed down as soon as Wylfa nuclear plant shut.

      Amazingly, some of the government morons are aware of the concept that transferring our production overseas and buying back the finished product does nothing to reduce the CO2 produced – the concept of the effect that has on balance of trade, employment etc is probably a step too far for their mini-brains. Short of providing new nuclear power stations – the provision of which is collapsing around them – they have no clue as to how to resolve this problem.

      • January 13, 2019 9:24 am

        Actually it can have no effect in the long term on our balance of trade and there’s no reason it should affect employment in the long term either.

        We don’t have any particular advantage in making aluminium so whilst this is stupid and probably wastes some invested capital and training, it doesn’t take away anything fundamental.

    • January 13, 2019 9:15 am

      There’s no reason it should cost more. And we then have the capital, labour, resources to make money doing something else, so there is no fundamental economic reason why it would hurt us.

      • dave permalink
        January 13, 2019 10:24 am

        The fundamental economic reason why it WOULD hurt us and also our trading partners is that economic exchange is based on comparative advantage. If, say, the UK can produce either ten tons of steel or one ton of wheat with X internal resources and Germany can produce either fifteen tons of steel or two tons of wheat with X internal resources then although Germany has an absolute advantage in both commodities she will specialise in wheat and the UK will specialise in steel and the exchange they make will be an improvement for both countries. Now if the UK Government – in effect – says the UK can produce either no steel or one ton of wheat it distorts the market and everything changes. The UK trades its one ton of wheat for seven and a half tons of German steel and remembers dimly that before all this malarkey started it had the internal choice of foregoing a ton of wheat for TEN tons of steel.

        A people are impoverished gradually, and ground to dust in a thousand little ways, and only an overarching, cool, view will identify the real moments when ‘the Casino wins.’ In the case of actual Casinos, of course, you are warned by your parents that you kiss your money goodbye at the door.

  4. Thomas Carr permalink
    January 12, 2019 12:38 pm

    If the Government was committed to low/competitive energy costs the present tariffs would not apply. Ergo the Government is lying about such commitment or does not understand the meaning of what it says.

  5. Jules permalink
    January 12, 2019 1:40 pm

    ‘Would it not have been easier to put a stop to obscene green subsidies in the first place?’

    Well said Paul.

  6. It doesn't add up... permalink
    January 12, 2019 1:43 pm

    I am sure she will claim that not proceeding with the Swansea Bay tidal scheme means that she is reducing costs. She did actually allude to it in the same session, describing it as the most expensive power station that would only create 30 jobs. Small consolation given her other decisions.

    • It doesn't add up... permalink
      January 12, 2019 1:51 pm

      Here’s Hansard

      Claire Perry
      The hon. Lady raises an important point. We want to continue to invest in technologies that have the potential both to decarbonise and drive global exports, and that is certainly an area that could contribute, although not at any price: we will not rerun the debate over Swansea, which would have been the most expensive power station the country had ever built and created just 30 jobs. There are potentially better, more valuable projects and I am always happy to look at innovative proposals coming forward to see how we might support this technology.

      • Harry Passfield permalink
        January 12, 2019 7:14 pm

        So, (I hate that word as a intro – but…) Perry proposes a gi-normously expensive power generation scheme and then cancels it – and claims the savings as a reduction in energy prices. Only in her empty head.

  7. Steve C permalink
    January 12, 2019 1:46 pm

    And it’s not a new phenomenon. About 20 years ago, I visited a small local metal fabrication business to buy a non-standard sized, steel equipment case. As I chatted with the owner, he commented, “Look, for the price I pay just for the sheet steel, before I pay my overheads, my customers can buy the finished box, enamelled, with the door locks, from Italy. Including shipping. How am I supposed to compete with that?”

    He couldn’t, of course, and went out of business a couple of years later. It seems almost surreal sometimes to reflect that this was the country that gave the world the Industrial Revolution.

    • January 13, 2019 9:26 am

      Why should he be able to compete? The Italians cannot compete with our insurance, asset management or bond issuance industries, so that’s what we do.

      Do you think large industrial companies can exist without those?

      • Iain Reid permalink
        January 13, 2019 9:38 am


        why shouldn’t we do both?. It seems strange to say we are good at one thing we don’t need to do another? There are or could be many more companies much smaller than the large industrial companies you refer to. Italy has lot’s of them.

  8. January 12, 2019 2:24 pm

    Like all recent energy ministers Ms Perry suffers from one, two or all three of the following:
    a) She is a consummate liar.
    b) She is too stupid to understand her energy policy.
    c) She is quite happy to kill off UK industry and to increase fuel poverty.

    She must suffer from cognitive dissonance if she can say that she is committed to minimising energy costs whilst at the same time forcing consumers to pay several times the wholesale price of electricity for wind power, solar power, biomass power, whilst simultaneously forcing consumers to pay wind farms not to generate electricity, to pay for grid upgrades to support renewable generators, to pay for smart meters and all the other insane energy policies she is responsible for.

    • 1saveenergy permalink
      January 13, 2019 1:17 pm

      Phil, please get off the fence & say what you really mean (:-))

      • Athelstan permalink
        January 13, 2019 1:36 pm

        Although perry is a joke, black humour laid to oneside, really there is nothing to laugh about, and Phil – he’s right though – is he not?

  9. Derek Buxton permalink
    January 12, 2019 2:25 pm

    Simple answer but probably over the Perry head, just scrap the Climate Change Act, it was nonsense when it started and many dubbed it the biggest suicide note in our long history.

    • Athelstan permalink
      January 13, 2019 1:38 pm

      As usual, simply retort but very much to the point and very well said Derek.

  10. Harry Passfield permalink
    January 12, 2019 2:46 pm

    Surely, if Claire Perry believed the crap her green officials put out all she would need to do is get steel companies to install smart meters: we’re told they will reduce our costs. No?

  11. John F. Hultquist permalink
    January 12, 2019 10:29 pm

    I believe I see the plan. Perhaps it comes from this history: Richard I, coronation

    If all other means of wealth derivation can be destroyed except the reliance on tourist money to view royals and their activities, then so be it. When nothing of use or value is left except a palace or two or three, and the most interesting things to see in the UK are the dresses and hats of the Ladies, then the importance of the Monarchy will have been restored.
    I blame the Prince of Wales. He is active in this and has the most to gain.

    • Jack Broughton permalink
      January 15, 2019 2:26 pm

      I’ve always regarded our clown prince as a total buffoon: maybe he has Machiavellian depths of cunning………….. No, he’s definitely a buffoon.

  12. January 12, 2019 11:10 pm

    Dunno I went past the British Steel plant this morning, and through it on Wednesday .. it was going pretty strong .. the rail division keeps announcing big orders
    eg from Germany.
    of course cheaper energy would bring security.
    .. but the hedgefund tht bought it two years ago for practically nothing , did buy it with the current energy policy

    • bobn permalink
      January 13, 2019 1:23 am

      Stew. As you say – THE British Steel plant is still working. There used to be several, most no longer working.

  13. markl permalink
    January 13, 2019 4:10 am

    No surprise. The real intent of “Climate Change” as spoken by the perpetrators in the UN is to replace Capitalism with Socialism. What better way to do it than kill off heavy industry which drives all industry and manufacturing? The UK has been a frenemy with Marxism/Socialism since the turn of the 19th century so they are any easy mark.

  14. January 13, 2019 9:35 am

    Sorry, but this is an economics-free piece. Ultimately the only people who pay for the steel and aluminium are “domestic consumers”. Thus it doesn’t much matter whether industry has higher costs or home users have higher costs, because it all ends up coming from the pockets of individuals consuming the end products.

    Higher energy costs make us poorer, wherever they initially fall. German consumers are poorer so they buy less steel (in cars, homes, washing machines). British consumers are poorer because steel us more expensive so they buy less of it – fewer cars, hones, we ashing machines. The end result is the same – we consume less if what we want so by definition we are poorer.

    • Jack Broughton permalink
      January 14, 2019 12:47 pm

      I guess that you believe in totally unfettered free-market but allow for any government to change the rules without objections. The basic requirement of any economy is trade surplus (visible + invisible trade), our invisible trade is massively in surplus, thanks to over a century of successful trading. Our visible trade balance is steadily deteriorating, especially with the EU: this removes jobs to other countries especially worthwhile jobs. Trump has certainly shaken the Chinese economy by protecting US jobs, I do not like him at all, but think that he has done the right thing for the US.

  15. Athelstan permalink
    January 13, 2019 1:07 pm

    viner and the great axis CRU/ wet office et al, they told us it was warming up and that British kids may never see snow again!! Erm, since that ineffably crass but typically inane and stupid comment from the global alarmunists just about every winter, we’ve seen at least some of the white stuff.

    btw…………’s it going – sur le continent and all that white global warming?

    Maybe Alpine Glaciers on the move again – a bientot?

  16. Jack Broughton permalink
    January 15, 2019 2:15 pm

    The fantasy TV news today was claiming that Antarctic ice is all melting and we may get massive increases in sea level … according to models! It seemed to be the annual summer ice extent reduction, but was accompanied by film of ice-sheets cracking and penguins looking sad. Our TV set only survives because I’m not allowed throwable objects any more.

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