The Minister for Energy, Clean Growth and Climate Change (Greg Hands)
I am grateful to the hon. Member for St Helens North (Conor McGinn) for securing the debate and for outlining so comprehensively the importance of glass to the UK. I welcome the opportunity to address the priorities and challenges faced by the UK glass sector, and to explain what the Government have done, and will do in the future, to support it. As the Energy Minister, I can assure the hon. Gentleman that the Department recognises the value of glass manufacturers, and takes their concerns very seriously.
In his excellent speech, the hon. Gentleman pointed out that British-made glass is renowned around the world. I always love a good bit of history, and he took us back to 1773 and the foundation of the British glass industry—indeed, probably the world glass industry—at Ravenhead. Glass has of course been around for centuries, but that was when it was turned into an industry. The hon. Gentleman told us about the 3.5 million tonnes that are produced each year and the 6,000 people employed directly in the industry, but he also talked about the much wider impact of the sector. As a former Exports Minister and a former Investment Minister, I know that it is industries of this kind that will enable global Britain to compete on the world stage and will continue to attract foreign direct investment, which plays such an important role in the hon. Gentleman’s constituency.
Let me now deal with a few of the points that the hon. Gentleman raised. The Department for Environment, Food and Rural Affairs leads on glass recycling and direct deposit schemes, but I will pass his comments on. DEFRA has undertaken extensive engagement with the glass sector, and will do so in the future. I am sure the hon. Gentleman will agree that the Government want to make recycling as easy and efficient as possible, but we need to ensure that that does not include any perverse incentives, or any element that is likely to damage some of our key industries.
The subject of energy-intensive industries will constitute the main part of my response, but I was pleased to hear the hon. Gentleman report that energy efficiency is up 50% in glass furnaces. That is an encouraging sign as we move towards net zero. Obviously some industries will be harder to decarbonise than others, but it is good to hear that glass has made significant progress in that regard.
The hon. Gentleman mentioned HyNet North West. I was delighted to visit some of the participants in the HyNet North West carbon capture, utilisation and storage cluster last autumn. I circled near the hon. Gentleman’s constituency: I was in Runcorn and Warrington. We are moving forward with HyNet in a very good place.
Conor McGinn
It was remiss of me not to invite the Minister to St Helens, and I apologise for my rudeness. He should not be afraid to visit us, and perhaps he will visit Glass Futures before the project is completed or come when we open it.
Greg Hands
Gosh, I am getting multiple invitations—was that an intervention on an intervention? In any case, I will happily have a look at the forthcoming visits schedule. It is obviously an important part of the world for our overall energy policy and energy future.
The hon. Gentleman invited me to be drawn on the energy profits levy, but I think I will avoid that for the moment. Not only is it part of a Treasury lead, but I feel that we want to concentrate on glass and energy-intensive industries. He mentioned carbon leakage, and obviously the UK is an important participant in the debate on carbon border adjustment mechanisms, which I also know about from my days at International Trade.
I shall deal in my response mainly with energy-intensive industries, particularly in relation to glass. The Government recognise the wider importance of all EIIs to this country, and their particular significance to local economies and communities, which all of us here today represent. I agree that strong and sustainable EIIs are hugely important to our national economy, particularly as we secure new global opportunities and continue our drive towards a green economic recovery. From offshore wind farms to building electric cars, we know that steel, ceramics and glass are three important EIIs that will play a big part in our low-carbon future and low-carbon industries.
In my time as a Minister in the Department for Business, Energy and Industrial Strategy, I have witnessed at first hand the skills and dedication of workers, and through my and colleagues’ engagement with the various business and trade associations, we have seen their drive to work with the Government to find a sustainable solution for EIIs that works for us all. I am sure we can all agree that the last two years or so have been particularly difficult for everybody, and EIIs have been no exception. Many workers in those industries have been engaged in activities that could clearly only be carried out on site, and in some cases they were operating equipment designed specifically for continuous use without shutdown. I would like to take this opportunity to put on record the Government’s appreciation of all those who work in those sectors in what can be challenging environments ordinarily, let alone in the middle of a pandemic. I would like to thank the essential workers who continued going to work on site and kept production going and sites safe during the pandemic.
The energy price rises that we have seen internationally in 2021 and 2022 have not helped business, particularly those with high energy usage. Increased energy demand globally as lockdown and restrictions lifted, increased demand for liquefied natural gas in Asia, upstream maintenance last year and increased demand for gas for electricity generation on the continent have all contributed to those high prices. Many large energy users will have hedging strategies in place that help to shield them from some of the effects of gas and electricity price rises, while others may be more reliant on spot market prices. We will continue to engage with businesses while higher pricing continues, and thereafter. My ministerial colleagues have regularly met the Energy Intensive Users Group, and we will continue to engage with the impacted sectors.
The energy price rises that have been seen internationally have not helped recovery from the problems caused by the pandemic, and global events in the last year have added yet more pressure—most obviously the barbaric Russian invasion of Ukraine. However, as well as facing these challenges, we are also now in a place where new global opportunities are presenting themselves, and we need to ensure that the UK is at the front of the queue with innovative ideas and solutions. Our energy-intensive industries—and notably glass—are well placed to be part of this.
This Government are determined to secure a competitive future for our EIIs. In recent years we have provided extensive support, including more than £2 billion to help with the costs of electricity and to protect jobs. This support includes electricity price relief schemes for eligible energy-intensive industries such as paper and pulp, glass fibre, iron and steel manufacture and batteries. The energy security strategy, published in April this year, set out how we will accelerate homegrown power for greater energy independence. Among the many proposals in that strategy, we committed to increasing the support we provide for EIIs over the next three years and effectively doubled the financial support that we provide. We will consider other measures to support businesses facing high energy costs, including increasing the renewables obligation exemption for eligible EIIs to up to 100%.
Furthermore, there are several other funds in place to support businesses with high energy use to increase efficiencies and reduce emissions, including the £315 million industrial energy transformation fund. Examples of sectors that have seen benefits have included the ceramics sector, which last year secured £18.3 million for the Midlands Industrial Ceramics Group from the Government’s strength in places fund to help establish a global centre for advanced technical ceramics. That will ultimately lead to the creation of 4,200 new jobs by 2030. The glass sector has also been awarded £15 million from our transforming foundation industries fund to establish Glass Futures, a state-of-the-art glass facility in St Helens, to which the hon. Gentleman referred. The co-operative work being done by Glass Futures and NSG Pilkington is already bearing fruit.
Recent trials using 100% biofuel in the production of float glass has created a product with a reduced carbon footprint of 80%—the lowest-carbon float glass ever made. This is truly innovative and exciting work, which I know the hon. Gentleman celebrates in his constituency. The Government will continue to work with Glass Futures to further support and deliver on our important objectives, and to foster an innovative, cross-sectoral working relationship. We will also continue to engage with the various councils, businesses and the Energy Intensive Users Group to ensure that their priorities are understood. The industrial decarbonisation strategy and the net zero strategy that we published last year outlined existing and new support for industrial decarbonisation that companies would be eligible for.
The Government and my Department are taking a number of steps to address the challenge of ensuring we have a secure supply of energy. We are in constant dialogue with business, National Grid and Ofgem to ensure that we get our approach right. I have outlined the energy intensive industries offering from the Department for Business, Energy and Industrial Strategy. However, many more initiatives across Government aimed at addressing these challenges are set out in the British energy security strategy, which was launched by the Prime Minister in April.
In my capacity as an advocate for British business, I am happy to use my platform to promote the exciting opportunities that are now presenting themselves to UK companies, including in the hon. Gentleman’s constituency. I remain committed to working with stakeholders to understand more about what can be done. I thank the hon. Gentleman and everyone here for participating in the debate, and for providing an opportunity for us to celebrate the contribution made by the British glass industry. We look forward to dealing with some of the energy and other challenges facing the industry, and to ensuring that the industry thrives, exports more and plays its proper part in our global Britain branding.
Mr Deputy Speaker (Mr Nigel Evans)
An Adjournment debate that we can all raise a glass to.
Question put and agreed to.