Energy-intensive Industries

Debate between Chi Onwurah and David T C Davies

Thursday 11th September 2014 Commons Chamber

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I welcome this debate on energy-intensive industries, and I thank my hon. Friend the Member for Stockton North (Alex Cunningham) and the hon. Member for Redcar (Ian Swales), as well as the Backbench Business Committee, for securing it.

I also thank you, Mr Speaker, for your flexibility in enabling me to contribute. Unfortunately, constituency engagements mean that I might not be able to stay for the winding-up speeches. I apologise to the Minister and to my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) for that. I will read Hansard with increased interest.

I am keen to contribute to this debate because energy-intensive industries are such an important part of our economy, as my hon. Friend the Member for Stockton North said in his excellent opening remarks. They employ about 200,000 people directly in the UK and support 800,000 jobs throughout their supply chain. They are an important part of the real economy, particularly, I might say, outside the south-east. My constituency is home to several energy-intensive businesses, such as Michell Bearings, which has been in Newcastle since 1920. There are many more throughout the north-east.

If we can look back that far, 160 years ago the north-east—one of the most innovative regions in the world—was leading the UK into the first, carbon-based industrial revolution. Sir Charles Parsons established his engineering works in Newcastle and he invented the multi-stage steam turbine, which was the iPhone of its day and helped to power Britain into a new era. Mosley street in my constituency was the first street in the world to be lit with electric light—something to which we have become all too accustomed.

Newcastle university, also in my constituency, was founded on local strengths such as marine, electrical, civil and chemical engineering, as well as agriculture and medicine, and they remain key strengths of the city and the university today: global reach and local roots. Today, the region remains a global base for manufacturing innovation. It is the only English region with a positive balance of trade. As well as the industries and companies that my hon. Friend the Member for Stockton North spoke of, we have fantastic facilities such as the National Renewable Energy Centre in Blyth and the Centre for Process Innovation on Teesside, which were both set up with the help of One NorthEast—regrettably abolished by this Government. In Newcastle, we have recently opened the Institute for Sustainability.

Energy-intensive industries and carbon reduction are crucial to the north-east economy. There is not, and should not be, any contradiction between the two. The transition to a low-carbon economy is a huge opportunity for the UK, with the potential to be a major source of jobs and growth. However, that transition is being put at risk as a direct result of this Government’s failure to develop a long-term, sustainable energy policy. They have failed to get behind green businesses. The UK is falling behind with investment in green growth, meaning that jobs and industry that should be coming to this country are now going overseas. I have spoken to the senior management at companies that would prefer not to be named who have said that the lack of a clear long-term energy strategy is putting off investment that could create jobs tomorrow, next month and next year. That is clearly detrimental to our economy overall.

The lack of an overall energy strategy and an integrated strategy for supporting energy-intensive industries is putting jobs and investment at risk. Conflicting signals from this Government about support for green energy versus terminology such as “green crap”—I think that was it—has seen the UK’s attractiveness to renewables investors slide down international tables. If we want to support the real economy and to build a long-term, sustainable economic environment, businesses need to know what they can expect from Government. They need long-term regulatory and policy certainty, and they are not getting that from this Government.

As my hon. Friend said, the carbon price floor was intended to create a floor underneath the EU emissions trading scheme, but since the collapse of the ETS price, energy-intensive British firms have been faced with far higher energy bills than European competitors. We need to know how Government are going to support these vital industries over the next five, 10 and 20 years, because that is the kind of life cycle they have for building plant and investing in countries. We need a long-term energy policy that supports and drives green growth and creates jobs in a low-carbon economy—a policy that gives investors the certainty and confidence they need to invest by committing to decarbonising the power sector by 2030. Yet as a direct result of this Government’s mixed messages, we are falling behind.

I have always considered myself a champion of new technologies in this House and elsewhere. When energy-intensive industry representatives first spoke to me of their concerns about some of the Government’s energy policy, I asked them what they were doing to improve their energy efficiency. Were they, for example, asking the Government and policy makers to subsidise obsolete industrial processes? Following further investigation, I was made to understand that many of the processes related to reducing energy consumption and improving energy efficiency are reaching the limits of the laws of physics. I am sure we are not all as familiar as we perhaps should be with the periodic table and the chemistry education we received, but I think we can all understand that a certain amount of energy is needed to change the state of molecules and to change gas to liquid. We have made so much progress in the efficiency of many such processes that it is not possible to go further. Given that so many of the processes are essential to our manufacturing base and a balanced economy, it is unarguable that they need to be supported during this transition.

The energy costs of energy-intensive industries can be more than three quarters of their addressable costs, and they are often already operating in highly competitive markets. There is also already a considerable incentive for them to innovate and become more energy efficient.

The industries need support from Government and a clear, long-term direction of travel. They need action in a number of areas, including fixing the broken energy market, as Labour has promised to do; exploring new sources of green energy, such as clean coal; and specific and long-term support so that they can continue to compete internationally.

In government, the Labour party was more courageous in this area than many others. The Climate Change Act 2008 made us the first country in the world to introduce a legally binding framework to tackle climate change.

[David T. C. Davies]

I am listening with interest to the hon. Lady, but does she not agree that the Climate Change Act is actually one of the reasons why we got ourselves into this awful situation in the first place? We are taxing industries in order to try to solve a problem that I am not even sure exists.

[Chi Onwurah]

I thank the hon. Gentleman for his intervention, but his final comment gave away his position. He said that we are taxing a problem he is not even sure exists, but the consensus on the need to address climate change is global and we certainly owe it to our children and our children’s children—[Interruption.] The hon. Gentleman is chuntering, but I am afraid I cannot follow him. The Climate Change Act is not responsible for climate change; it is a response to climate change and one that is necessary for the long-term sustainability of our economy and the global economy.