Low-carbon policy won’t drive out manufacturers, says Huhne

The government won’t set policies that risk driving manufacturers out of the UK in order to reach carbon-cutting targets, Chris Huhne has said.

Speaking exclusively to The Engineer, the UK energy secretary moved to reassure energy-intensive industries that Britain would remain a competitive place to do business, despite last week setting one of the world’s strictest emissions targets.

‘It would be ridiculous for us to set a policy framework that simply drove energy-intensive industries out of the UK to set up somewhere else and emit exactly the same amount of carbon,’ he said.

60 per cent of manufacturers are highly concerned about rising energy costs

IMechE survey results

Businesses should also beware, he added, that many other major industrialised countries, including India and China, were taking similar actions to curb carbon emissions.

‘Yes we need to make sure that we are not disadvantaging industries in terms of competitiveness, but… the idea that people are going to be able to up sticks and go somewhere where they can ignore the climate-change problem is very short sighted.’

Huhne announced last week that the government had agreed a legally binding target of reducing carbon-dioxide emissions by 50 per cent on 1990 levels by 2025.

Plans to move to more renewable sources of energy and phase out coal power plants are likely to push electricity prices up, and energy-intensive industries such as manufacturing fear the impact this will have on their business.

A survey by the Institute of Mechanical Engineers (IMechE) found that 60 per cent of manufacturers were highly concerned about rising energy costs — more than those worried about labour costs, falling consumer spend and the burden of regulation.

‘The UK is showing clear international leadership by moving forward with its transition to a low-carbon economy and this is going to mean higher energy costs for everybody,’ said IMechE president John Wood.

‘But manufacturers are worried and government needs to make sure it doesn’t force energy-intensive industries out of the UK and into countries with more lax climate-change targets. This is of benefit to neither the UK economy nor the environment.

‘The government needs to move forward quickly with its promises to mitigate the effect of ambitious climate-change targets on energy-intensive industries in the UK.’

Huhne said the government was looking at a range of solutions, such as free allocations of credits within the EU emissions trading scheme and encouraging the installation of biomass, and would announce measures by the end of the year.

He dismissed suggestions that the renewable technologies the government was relying on to help meet its ambitious low-carbon generation targets were not yet proven.

‘If you look across the whole area of technologies that can replace existing technologies with low-carbon forms, the only real area where there continues to be a problem is aviation and the rest of it is, frankly, getting costs down rather than proving it will work.’

He admitted that there were still some uncertainties about the technologies and that was why the government was pursuing a portfolio approach of exploring different ideas for renewable power generation.

‘It’s our job to set a framework whereby early-stage technologies — for example, wave or tidal stream — can be brought to a point where they can be commercial.

‘They may never get there and if they don’t then the subsidies end and they don’t become a reliable solution, but we don’t know what the most successful low-carbon technologies will be.’