Energy-intensive Industries

Alan Whitehead Excerpts

Wednesday 24th November 2021 Westminster Hall

[Dr Alan Whitehead (Southampton, Test) (Lab)]

This has been an excellent debate, involving Members on both sides of the Chamber. It has focused on the two things that are absolutely essential for energy-intensive industries. The first is how we deal with the present spike, as it is called—although it is, in fact, a dome—in energy prices, how they affect energy-intensive industries and what action might be taken to alleviate their suffering as they attempt to cope with, and continue to plan their activities on the basis of, those unprecedented price rises. This time last year, gas was 39p a therm, but it is now well over 200p a therm. That is an enormous, fivefold increase in the price of gas, and that of course runs through into electricity prices. It is absolutely crucial for energy-intensive industries to have a stable price environment, and it is essential for their future plans and competitiveness that they have knowledge of what the future environment might be.

Secondly, the biggest challenge for the future, as mentioned by hon. Members, is how we decarbonise those vital energy-intensive industries so that they continue to produce in and for the purposes of the UK. We should not export energy-intensive production but decarbonise it, so that it continues to operate in the UK as effectively as it has done in the past. In that context, my hon. Friend the Member for Aberavon (Stephen Kinnock) pointed out that steel is not a sunset industry but very much an industry of the future. Our efforts to decarbonise such industries should not be seen as a means of closing them down or of removing elements of their activities because they are sunset industries and others can decarbonise. Our energy-intensive industries need to be decarbonised so that they continue to play a central role in future production.

We have heard excellent advocacy this morning. I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton) on securing the debate. He is one of several Members present from Stoke, home to the crucial ceramics industry. I also congratulate Members on both sides of the Chamber on their strong advocacy on behalf of the steel industry and on their clear understanding of what we need to do about energy-intensive industries.

It falls to me to remind Members that energy-intensive industries are not just about ceramics and steel. A little while ago, the Government helped energy-intensive industries with energy prices by exempting them from some levy costs. There was a list of 70 different sectors that are energy-intensive industries, including the manufacture of malt, the weaving of textiles, the casting of iron, the manufacture of batteries and accumulators, the manufacture of corrugated paper, rubber products, plastic products, technical ceramic products, cement, metal packaging and electronic wires, and metallurgy. Those are all energy-intensive industries across the country, not just in certain parts of the country, and they need our support on current prices and the need for decarbonisation. What I can say about prices right now—I think everyone present will agree—is that we absolutely have to tackle the harm that they are doing to energy-intensive industries, and the difficulties that such industries are experiencing.

One thing that we should all be clear about is that absolutely nothing has happened so far in this country in relation to the price rises. The Government appear to be caught like rabbits in a headlight and waiting for the price spike to go down the other side, so that they do not actually have to do anything. As I have mentioned, this is not a price spike. It is a possible future sea change in energy prices, and it needs to be approached on that basis. It is not sufficient simply to hope that this will go away in a while and things will return to normal, because they probably will not do so, and we need to have Government action to ensure that there is a regulated price arrangement for energy-intensive industries that protects those industries from high prices and the volatility that we are seeing on world markets. There are several ways in which that can be done. As far as I can see, however, the Government have not even looked at any of those things. Indeed, as hon. Members have mentioned, a number of other European countries are doing things in order to combat the price spikes, or price dome, that we are seeing at the moment, none of which are being followed by the UK Government.

There are also issues arising from the fact that a number of energy-intensive industries had a bad deal with energy prices before the present price spike. From my frequent conversations with my hon. Friends the Members for Aberavon and for Newport East (Jessica Morden), I know that UK steel has a cost price far greater than comparable steel production in France and Germany. That is partly because those countries do different things to assist their industries that we do not do in this country, concerning things such as distribution costs and the joint commissioning of procurement of energy packages. The Government would be well advised to look at such things, both now and in the long term, in order to get the stable environment for energy prices that we really need for energy-intensive industries.

At the same time, we also need to get serious about the support that we need to provide for the decarbonisation of energy-intensive industries. My hon. Friend the Member for Aberavon mentioned Labour’s £3 billion steel renewable fund, which is a fund not just to stabilise prices but to take steel well down the road towards decarbonisation by changing things such as electric arc furnaces, hydrogen production for the introduction of energy for steel generally, and a host of other things. They need to be replicated in those other energy-intensive industries with Government support, so that they can decarbonise in good time and good order and keep their production going across the country in a way that we need for the future.

That is a substantial task for the Government, both in the present and in the future, and very little has been achieved so far. I am sorry to have to say that, because it is so important that we get our act together right now and for the future, given the absolutely vital role that energy-intensive industries play in our country’s economy. I look forward to hearing from the Minister whether his Government have had a change of heart and are, perhaps even at this late stage, deciding to do something about price rises and the decarbonisation of energy-intensive industries for the future.