Germany has handed over 40 times more in energy subsidies to heavy industry since 2013 than the UK, highlighting one reason why British steelmakers are in such trouble.
Berlin in that period has granted subsidies worth over €9bn to its most intensive energy users as it raised levies on others to help pay for its transition to renewables.
But in the UK, where Tata Steel has in part blamed high energy prices for last week’s decision to put its business up for sale, the government has paid out just £160m.
Richard Warren, an energy policy adviser at the EEF manufacturers’ organisation, said: “We have to ask why the UK steel sector fared so badly in comparison even with those in other European countries. This is surely a big reason for that.”
When Tata announced last week it wanted to pull out of its entire UK business, putting 15,000 jobs at risk, it mentioned high energy costs alongside the falling price of steel as one of the main reasons. The company has repeatedly complained about “cripplingly high” costs of electricity, blaming them in the past for job losses.
Electricity costs are higher in the UK than elsewhere, in part because the British government has decided to set a minimum price for carbon emissions above that being traded on the EU market. This means it costs more for fossil fuel power plants to produce electricity, encouraging lower-carbon generation and pushing up overall electricity prices.
According to figures from the energy department, the price that “extra- large consumers” — which includes steelmakers — paid for their electricity during the second half of last year was nearly double the EU average.
Ministers have responded by offering companies rebates on electricity costs to compensate for carbon prices. They are also planning to introduce a new rebate on renewable energy costs, which the government says could be worth over £400m for the steel industry alone.
Source: FT