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back to article UK bungs £250m to factories stung by climate-change policy

The heaviest energy users are being asked to shape a proposed £250m compensation package designed to help reduce the impact of energy and climate change policies on the cost of their electricity. The new consultation, which sets out the design of the scheme, follows on from the Government's call for evidence on the issue in …

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Unhappy

Back to the 70's?

Hope this doesn't turn into a rerun of the disastrous Labour policies of propping up moribund industries which needed culling. What pressure will these firms have to adapt to a world where energy is becoming ever more expensive? Are we funding research on this? Worried ...

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Re: Back to the 70's?

Actually it would not appear to be that at all.

Here we have perfectly productive industries whose energy usage leads to them being sacrificial cows on the altar of the Carbon Cult. You then couple that with the fact that as many place do not levy swingeing energy taxes, due to treaty exemptions for "developing world" countries, the inevitable outcome is relocation and the loss to Britain of these industries and their associated jobs.

The real question here is if we are going to, in effect, nullify the carbon taxes for those hardest hit (i.e. the highest energy users) is this an admission that the whole arrangement as it stands is a right, royal pig's ear and merely a fig leaf to keep the greenies on message?

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Anonymous Coward

Re: Back to the 70's?

Aluminium production is a highly energy intensive process. The plants are often located right next door to a power station because of the amount of power they use.

This means that one of the main factors in determining where to locate a plant is the cost of electricity. A second factor is the stability of supply. The UK currently fails on the price, due to the subsidies paid to windfarms, and looks like if will fail on the stability in the near future due to the closure of coal fired power stations.

Aluminium production isn't a "moribund" industry, it is an essential industry in a world where you want to reduce energy consumption. Because of its lightness and strength it is widely used in the production of all types of vehicle and its lightness means less fuel is used.

Europe will eventually lose all aluminium production due to its energy policies.

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@TeeCee Re: Back to the 70's?

is this an admission that the whole arrangement as it stands is a right, royal pig's ear

I did wonder that myself, I thought the whole point in the taxes were to encourage nations to use less energy or face paying a lot more. Rather than enforce that, a 'package' is instead being put together.

Not that I disagree with helping the industries, whilst the above may have sounded like a hardline green, my view is actually that the taxes are a ill thought out, knee jerk reaction to some heavy lobbying by a bunch of eco wack-jobs greens.

If they want to reduce energy usage across the country, they need to look more at what causes us to use so much. A holistic view is also needed, the car scrappage scheme a few years back was a complete failure when you consider the energy used in manufacturing the replacement cars and disposing of the old ones. Might have saved a few emissions, but it's almost certainly still a loss on the hug mother earth front.

I've no problem with trying to help the environment, and am more than willing to do my bit, but taxing everyone into the ground isn't going to work. There's a base-line of usage the average person cannot get below, and the taxes mean that using the minimum is costing more and more and more.

Not to mention, from a cynics point of view, we'll now be paying those taxes twice. Once on our energy bills, but a second time through other tax streams to help fund the package they are proposing. Why not just call a turd a turd and drop the taxes?

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Re: @TeeCee Back to the 70's?

"If they want to reduce energy usage across the country, they need to look more at what causes us to use so much."

They could do something about unnecessary commuting for a start: not much point trying to tax people off the roads when it's not their choice and they don't want to be there anyway; seems weird that it's almost 20 years since I did a highly successful pilot of a working from home programme but since then nobody is interested.

Seems the current lot are more interested in giving the sick and disabled a good kicking instead of doing anything useful though (not that the previous lot were any better.)

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Anonymous Coward

Re: @TeeCee Back to the 70's?

"almost 20 years since I did a highly successful pilot of a working from home programme but since then nobody is interested."

Well of course they aren't. Most organisations judge their people by how busy they appear to be, and reward their managers by how many people obviously work for them. In the case of working from home, many of the filler activities that take up office time simply don't happen, and the question of how effective and productive people are comes into question.

I'd guess that 100% of the value I add to my business is achieved in 10% of the time spent or less. The other 90%+ of my time is spent on unproductive, pointless filler activities that maintain a semblance of "work". My employers are happily prepared to pay me 100% of my salary for the output, but the critical unstated part of the equation is that I must also be seen to be busy for something approaching 100% of my time. If I work from home for more than the odd day, there's less of the being seen to be busy, and they'd need to accept the infrequent flow of substantial efforts, and most organisations can't do that.

If you operate in a process role where you "do" something that has a measurable output, then even at home that can be monitored. But as you move into less process-centred activities, its much more difficult. Take accountants. They do one and a half weeks of work across a month end, then spend three weeks looking busy. Sales & marketing people and management consultants et al disguise their slack periods as "business development". IT bods clear off to the server room to read the Sun, or pretend that the Reg is work. Managers with control of their diary travel to sites, arrange meetings, attend conferences etc. MD's go and play golf and categorise it as work.

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Terminator

Re: @TeeCee Back to the 70's?

I'd love to work from home, sadly as one of the energy guzzlers , its a bit hard to get a 10 ton robotic machining cell through the front door.

I guess I could sit at home and prepare the programs, but then that means I'd have to make a 2 mile trip to work in a hurry when some numpty decides to put the wrong pallet of parts in the loading bay... usually about every 20 minutes until said numpty is fired for his own safety.

Terminator..... because that what some of them need

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Re: @TeeCee Back to the 70's?

A whole segment of quite well paid management and hr work would disapear.

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Anonymous Coward

Re: @TeeCee Back to the 70's?

"A whole segment of quite well paid management and hr work would disapear"

No because you don't get the benefit from non-process workers, despite what kn**-end management consultants believe. So if I spend 90% of my time doing low value make work, and you then fired the hypothetical nine colleagues in my team, I wouldn't achieve the same thing by keeping my nose to the grind stone. Take innovation and good ideas - you can't expect one person to have all the good ideas - that comes from the noble gas of inspiration, accompanied by knowledge of the subject, and time to think things through.

I've worked in a tech business where a Cerberus private equity team did cull all the management in this way, a truly radical slash and burn to match operating costs to turnover and target profit levels. All decisions were directly taken by a small team of Cerberus appointees, and they put in a very lean management and operating structure. Sadly for them turnover went down as well, the savings didn't seem to match the reduction in management and admin jobs, with the result that they then made a loss for three years before selling the business for less than they bought it for.

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Thumb Down

The original purpose of the original climate change legislation was to increase the cost of running, for example, a carbon inefficient metal smelting plant. The owner of the plant was thereby forced to become more efficient or close the plant. It now seems that the effect of the policy is being nullified, not by ending the climate change policy but by simply giving cash to the inefficient metal smelting plant - but only after they have jumped through the requisite bureaucratic hoops.

So we now have the cost of administering two mutually opposed policies. Just like the US government simultaneously spending a fortune on anti-tobacco programs and tobacco farm subsidies. Mental.

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Anonymous Coward

Aluminium plants are about as energy efficient as they can get, they just require huge amounts of energy to extract the aluminium. The energy required is huge because of the strength of the chemical bond between the aluminium and oxygen. The only way to reduce the energy required is to change the laws of chemistry.

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I did not specifically mention aluminium production, but: "In order to be considered for the proposed scheme, a company must operate in one of the sectors listed in the consultation, which include aluminium production, chemical and fertiliser mineral mining and others."

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Anonymous Coward

@AC101

A bit of pity that the Lynemouth alu smelter closed in March of this year, the Anglesey smelter closed in 2009. AFAIK the only remaining UK aluminium smelter is the Lochaber plant, which because it is hydro powered anyway probably won't get any assistance, and will then be shut as sub-scale and uneconomic in the normal manner.

Another useless, belated and inadequate piece of government bungling.

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Bronze badge

So...

We're creating taxpayer-funded subsidies which will put some businesses out of business, and then we're going to subsidise the business so they don't go out of business.

Perhaps I'm just some sort of crazy reactionary but wouldn't it be easier to get rid of the subsidies in the first place? Then we wouldn't have to give subsidy money to anyone.

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Meh

Re: So...

Spot on there.

The problem is that government set up policies, subsidies, taxes, without stopping to consider the consequences. There's usually a fundamental problem because pols and civil servants assume that economics gives them the answer that "Higher prices = lower demand" and to these people that means that higher prices makes everybody use a bit less. But life isn't like that, and the most significant means of aggregate demand reducing is not that everybody uses 2% less in response to a price rise, but that marginal buyers exit the market (in plain English, the poorest can't afford the good in question). Look at petrol - do you see people giving up their Range Rovers? No. Do you see them downsizing their Ford Focus to a Ka? Yes. Or just using the bus.

So raising domestic electricity prices with a 15% surcharge for DECC to play with, plus 5% VAT makes the poor cold - that does reduce demand, but then we have subsidies to reduce fuel poverty. Result no net change in demand, but higher fuel prices all round, and a lot more bureaucracy.

At the industrial level, we have exactly the scenario you describe, plus the migration of industrial activity to China, where *more* pollution is created than if the activity stayed in Europe. But hey! Moving steelmaking to China fulfils European ambitions to "reduce their carbon footprint" so it must be a good thing.

The sensible answer is indeed to do away with the complexity and subsidies. But what would the 424,000 useless dossers of the Civil Service do if they weren't inventing complex policies to achieve something, and then to unachieve it because they didn't like the result?

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Anonymous Coward

Re: So...

I think that you are making the mistake of assuming that this is supposed to make what an engineer would call "sense".

If you re-examine it from what would make "sense" to a rent seeking corporation, big government stateist tax and spend regulator or never-mind-the-evidence-I'm-saving-the planet greenie it might become more understandable ;-)

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Anonymous Coward

This just further reinforces my view that we will end up like the Amish living in the 1800s with no lighting, electricity etc, just so the aviation industry can go on pumping out CO2 like there's no tomorrow.

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Trollface

If it moves tax it..

"Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."

- Ronald Reagan

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Anonymous Coward

Industry lobby versus taxpayers ..

"The European Commission plans to tighten the greenhouse gas emissions targets in the Emissions Trading System. Ralf Martin and colleagues examine the likely impact on affected businesses, and conclude that industry is exploiting concerns about competitiveness to obtain free emission permits according to criteria that are too lax". link

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