Energy Intensive Industries

Tom Blenkinsop Excerpts

Monday 25th March 2013 Commons Chamber

[Gregory Barker]

I am glad to hear it. My hon. Friend’s representations played a part in the decision, but he is absolutely right; a number of hon. Members made the case. I have been to Stoke to see factories there and the challenges they face.

The measure will mitigate any competitive disadvantage that the UK mineralogical and metallurgical sectors face. It will help them to move to a more level playing field with their EU competitors. It also supports the Government’s growth agenda and our commitment to ensuring that manufacturing remains competitive during the shift to a low-carbon economy.

Industrial energy efficiency has a strong role to play. We cannot defy the laws of physics, but industrial energy efficiency represents a huge opportunity for UK plc to improve its international competitiveness. It is good for growth and competitiveness, and it drives our energy security. It is also key to managing costs and building margin growth. The Government are supporting industry to implement energy-efficiency measures that will help to reduce the impact of rising energy prices on industry.

We recently published our energy-efficiency strategy, which sets out our commitment to seizing the energy-efficiency opportunity, accelerating the deployment of 21st-century energy-saving measures. We will do that by connecting energy-efficiency knowledge and technologies to finance, seeking strong returns; supporting energy-efficiency innovation; harnessing the power of improved energy-use information, driving its availability and disclosure; and encouraging collective action on this new and better information.

We recognise the need to minimise regulatory impacts on industry. We have taken steps to simplify our key schemes on energy efficiency and carbon reduction. We have taken measures to simplify climate change agreements, the carbon reduction commitment and the EU emissions trading scheme to remove overlaps and reduce administrative burdens. Actions we have taken include consulting on and simplifying climate change agreements and introducing an opt-out for the EU emissions trading scheme for small emitters and hospitals. We have consulted on a process for the simplification of the CRC and on new regulations to implement the EU emissions trading scheme in the UK from this year.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

The Minister is listing the many causes the Government are taking up on behalf of energy-intensive industries, but is there not a distinct lack of industrial activism? We are looking at significant structural contracts in Scotland and in Merseyside, but the British steel industry is losing out. In my area, we recently saw the loss of a potential carbon capture and storage project for Wilton, which would have added at least 30 years to existing infrastructure in the chemical industry there.

[Gregory Barker]

The hon. Gentleman is right to a certain extent. There are big challenges and we cannot turn around a supertanker in a short time. We have seen a consistent decline in manufacturing capacity in the past decade, and before then, but we are beginning to see a rebalancing of our economy. In the renewables sector, a great deal more of the equipment required, for example, for the massive expansion of offshore wind, has begun to be fabricated and manufactured in the UK, particularly along the east coast.

[Tom Blenkinsop]

I am grateful to the Minister for giving way again. On the issue of offshore wind, recently at Redcar contracts were promised with Tata Steel to provide the base structures and with TAG Energy Solutions in Billingham to provide the monopiles, but both lost out to foreign competitors. What are the Government doing proactively with industry to roll up their sleeves and get involved so that industry can win those contracts?

[Gregory Barker]

I can tell the hon. Gentleman that he is wrong about TAG; it has won a significant order, which was secured after a personal intervention by the Minister at the Dispatch Box. I spoke directly to the board in Germany, and intervened actively on industrial policy. I am therefore glad that he raised that issue, as TAG has a big manufacturing future ahead of it.

We accept that large energy-intensive industries in Europe benefit from tax rebates and other exemptions, which means that their prices are significantly lower than the average for their country. However, it is important to remember that many of the exemptions applied to those industries have distributional impacts. If industry does not pay them, other electricity consumers need to pay more. As the Minister responsible for fuel poverty, I have to bear in mind those distributional impacts and fairness for those who pick up the bill.

May I say something briefly about gas security, which is topical, particularly given what has appeared in the newspapers over the weekend and the cold snap that we are suffering? We are aware of industry concerns about current high gas prices and low storage stocks, but while high prices in a spike are uncomfortable, they are a sign that our market is working and that we are attracting the gas that we need through a diverse range of infrastructure. Price volatility is not something that we can completely remove, and nor should we seek to do so, from our market. It is the key mechanism that enables our market to balance efficiently at the lowest cost to consumers, and it incentivises investment in new infrastructure such as storage.

Our market is resilient to global events, and has spare import capacity built in. However, we take gas security and the risk of harmful gas spikes seriously, and we are determined to do more. We are working with Ofgem to review our market arrangements, to ensure that they continue to provide secure supplies to consumers at a fair price. At the same time, we are diversifying our energy mix to reduce our dependence on imported fossil fuels, and have put in place robust policies to cut energy demand.

In conclusion, I very much welcome this debate on energy-intensive industries. I commend the hon. Member for Corby on making a compelling case. He is right to hold the Government to account on this issue, but I can assure him that we take it absolutely seriously. We are determined to do more within the context of the difficult economic and fiscal situation that we inherited, but we recognise the benefits of acting now to ensure that we maintain these industries at the same time that we build a secure low-carbon future. Those policies are designed to deliver efficient, low-carbon, secure and affordable energy supplies.

Question put and agreed to.