Steel will be crucial to future of green energy

Posted on 11 July 2011


ENERGY and Climate Change Secretary Chris Huhne has said UK steel must be at the heart of the green energy revolution.


His comments were intended to reassure MPs concerned about the impact of the proposed new carbon tax on energy-intensive industries, such as Port Talbot and Llanelli steelmaker Tata.


Plans were announced in the Chancellor's Budget for a new Carbon Floor Price (CFP), which Tata said would make UK steelmakers less competitive.


Tata fears the floor price will lead to higher costs for generating electricity a€' hitting energy-intensive industries such as steel.


Steel produced elsewhere in the world would not be subject to the extra costs, said the company, which employs 4,100 people in Port Talbot and 600 in Trostre.


Under the existing rules, energy companies must generate a fixed amount of green energy every year, or else buy permits to pollute on the open market.


The new tax kicks in if the cost of these permits falls too low.


From 2013, the 'floor price' of a permit needed to emit a tonne of carbon will be set at ?ï¿¡16, rising to ?ï¿¡30 by 2020.


But last night Mr Huhne said his department was working hard with the Department for Business, Innovation and Skills on a package to help energy-intensive industries.


Speaking during energy questions in the House of Commons, Mr Huhne said: 'We are working hard with the Department for Business, Innovation and Skills on a package to help energy-intensive industries to ensure that, for example, when we build much of the important energy infrastructure that we are going to be building over the next ten years, the demand for steel and aluminium stays in the United Kingdom.


'That is a crucial part of what we are doing.'


Mr Huhne added: 'Do not forget that we are also seeking an enormous increase in demand for British manufacturing as a result of the need to replace our energy infrastructure, and that investment levels will be running at double the normal level.


'That will give an enormous shot in the arm to manufacturing.'


Earlier this year Tata warned Government moves to tackle climate change could have a serious impact on heavy industry.


A company spokesman said at the time: 'The company is interested in constructive discussions with the Government to find solutions that will avoid destroying the competitiveness of the UK's steel industry while at the same time tackling climate change and the energy crisis.


'The company is a global steel-maker with competing investment opportunities, and the additional costs associated with environmental and energy regulation in the UK and in Europe as a whole are causing increasing concern.'


Around the same time, Aberavon MP Hywel Francis said: 'Steel has had a dramatic turnaround thanks to increased demand from China, Brazil, Turkey and India.


'But the Government cannot ask the steel industry to find an extra ?ï¿¡30 million plus in taxation without putting a question mark over the industry's future.'




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