Draft Electricity Supplier Obligations (Excluded Electricity) (Amendment) Regulations 2019

Lord Mackinlay of Richborough Excerpts

Monday 3rd February 2020 General Committees

[Craig Mackinlay (South Thanet) (Con)]

It is always a pleasure to serve under your chairmanship, Mr Paisley. I just have some observations about where we are going with these measures.

I fully agree that for energy-intensive industries—a category that we are extending today to include flour milling—where there is the threat of foreign energy prices putting some of our industries out of business, with resultant job losses, this has to be a sensible policy. But—and this is a big but—if we are to make sure that EIIs do not suffer disadvantage on the global market, which is what this sensible policy is trying to achieve, consumers, smaller businesses and others will bear the burden of maintaining the required CfD amounts. That is where we are going with this. I can imagine that over time, more and more industries will say, “We have a problem. We are facing foreign competition, because energy per kilowatt hour in China, India, the US or other countries is that much lower.” For those industries in the UK, although they have the advantage of being on-site, the energy difference will be enough to solicit an import to do the substitution.

We have to be very careful. Our laudable aim of zero carbon will achieve little if all we do is offshore some manufacturing, when the offshore manufacturer is not producing the tonne of steel for the same number of kilowatt hours as could perhaps be achieved in a cleaner factory in the UK.

[Alan Brown]

On the topic of not offshoring manufacturing, does the hon. Gentleman agree with Matt Cole that the UK Government should include in future CfD auctions an incentive for bidders to use UK-based supply chains? At the moment, there is no quality assessment, so it is “lowest price wins”, but that could be changed with the correct tender assessment process.

[Craig Mackinlay]

I understand the hon. Gentleman’s point about domestic supply chains. I am not an interventionist in supply chains and the UK economy in the same way that his party is, so I probably would not agree with him about that.

To develop my point to a conclusion, if—for example—steel is being produced in a foreign jurisdiction in a way that is not so efficient per tonne and number of kilowatt hours, and we then use fossil fuels to import that steel on a ship, we do nothing for the planet in terms of overall CO₂ reductions.

I welcome the proposals, but I envisage various industries arguing for this policy to be extended over time, which will cost domestic consumers more and more, so some care is required. Much as I support what is being done today, there is a greater discussion to be had about the whole renewables industry and how it is financed, because at the end of the day, those who are suffering fuel poverty will only have their poverty exacerbated by such moves.