Industry and carbon prices

Japan makes seven times as many cars as the UK.  China produces fifty seven times more steel than the UK. Neither China nor Japan have a carbon tax or price for carbon in their energy costs.

The UK used to be the workshop of the world. It was famed for its ships and steel, its cars and domestic goods. Continuous decline under governments of all three main political parties since 1945 have left us with a much smaller industrial sector, and with a much much smaller industry relative to China, India, Japan, Germany and the USA.

It is true we still have some good companies and good technology. The UK pharmaceutical industry is strong, as is aerospace and defence engineering. We have a great base in performance cars and some component technology in autos, and some individual good car  plants for major overseas manufacturers. When we want to buy trains, nuclear power stations or many consumer durables we usually today turn to imports.

The government says it wants to drive a revival of manufacturing. This is a very popular policy around the country. The left wing politicians and commentators who dislike big business,  usually genuflect in favour of more industry. Even the keen green campaigners within the major parties consent to the idea that we ought to make more cars, planes and domestic appliances here,  though all these things take energy to make and burn energy to use.

This is where, however, these same commentators and lobbyists can talk with forked tongue. They tell us we should make more things, yet they also want us to hit ever more exacting targets for carbon dioxide emissions. The simplest way to get our emissions down is to make less here and import more from abroad. That does not help the world picture but it hits the domestic targets.

Much of industry requires using large quantities of energy, to transform earths into metals, and to shape metals into products. Steel and aluminium manufacture requires huge quantities of energy. Process plants making glass or cement require large amounts of energy. Even assembly plants need subtantial raw energy as they are heavily automated. Petrochemical processes to make and shape plastics also require large inputs of heat.

Soon the government has to set a carbon price. This is central to decisions people will then make about which technology to adopt for the many new electricity power stations we are going to need. We have to replace the coal stations that will close thanks to the EU Emissions legislation  come 2015, and to replace ageing nuclear stations near the end of their design lives. Set the carbon price high, and it will tip it more in the direction of renewables.

But if the government sets it too high it will also mean the end to dreams of the Uk restoring a stronger position in basic industry. A high carbon price means we will have to  import  our steel, our aluminium, even our cars and our fridges, washing machines and cookers.  Energy costs are bigger than labour costs in some of these energy intensive activities. It’s not an easy choice for this government. It will be a test of  what matters more  – UK industry and jobs, or UK CO2 targets?


  1. lifelogic
    March 19, 2011

    The carbon price should not exist (or be zero) is in an absurd political structure and certainly is pointless if not worldwide. It should be abolished or be zero, above that it is just exporting jobs. If people of the green religion wish to waste money invest in pointless green house Bling, to make them feel good, let them do it with their own money.

    Get rid of the green buy in tariffs too which encourage stupid investments in pointless expensive technology. Get on with building the new safe nuclear stations and forget nonsense carbon capture too.

    On Libya:

    Cameron suggests we should judge Gaddafi by his actions not his words. I tend to agree and do this with everyone where possible.

    Based on Cameron’s actions rather than his words we find “Cast iron” Dave is a pro EU, pro ever bigger government, democracy destroying, devoutly green, very anti business, and a 50%+ tax and waste leader.

    One who also said “We should accept that we cannot impose democracy at the barrel of a gun; that we cannot drop democracy from 10000 feet – and we shouldn’t try”. Now it seems he does wish to try this on Libya – while at the same time extinguishing the residual remains of British democracy with a few stokes of a pen at the same time.

    Judge him by his actions indeed we should alas the alternatives are even worse.

    1. lifelogic
      March 19, 2011

      Manufacturing simply cannot compete already with high labour costs, over regulation (especially in employments and health and safety) high energy and fuel costs, high tax rates, over complex tax system, poor infrastructure and a huge often parasitic state sector, huge state debt interest and a generally anti business pro “equality” and “sustainability” anti science government.

      And the BBC and schools ramming this nonsense religion at everyone almost every day of the week.

      1. lifelogic
        March 19, 2011

        Also an absurd litigation culture and unbalanced anti business legal structures that encourage this culture.

      2. Simon
        March 19, 2011

        Why do labour costs have to be so high ?

        One of them is that over the past 40 years the way to make money in Britain has been through proberdy and not economic activity .

        If people were paying only half as much for their accomodation and got the full benefit of their pensions saving rather than such a large proportion of it going in charges they could earn 20-25% less and not notice the difference .

      3. Bazman
        March 19, 2011

        What health and safety laws do you propose to abolish?

        1. lifelogic
          March 19, 2011

          Mainly the ones that serve no purpose or actually make safety worse by distracting people from real safely issues. About 80% of them fall into this area.

          1. Bazman
            March 20, 2011

            80%? Oh really? Care to name one?

        2. Scottspeig
          March 22, 2011

          For starters, the reams of H&S paperwork required that we have to produce on each job that has to be job specific (general ones are unacceptable). The fact that no-one reads them is beside the point!?

      4. Bazman
        March 19, 2011

        No doubt you see the banning of asbestos to be an absurd anti business piece of health and safety outlawing a wonderful material that forced companies to seek unnecessary and worse more expansive alternatives?
        If you don’t you would have at that moment in time.
        Asbestos is still widely used in Russia and if you point out the dangers they don’t believe you. I’ve seen people just sawing it up like wood.

        1. lifelogic
          March 19, 2011

          Asbestos is certainly a lung/dust risk but there is huge over kill in this area as there was with lead in petrol and use of DDT. Large numbers have dies as a result of this over reaction as they will from the green energy nonsense.

    2. lifelogic
      March 19, 2011

      New forest Lapland:

      I see that the men – who promised visitors a winter wonderland with snow-covered log cabins, a nativity scene, husky dogs, polar bears and other animals, as well as a bustling Christmas market and instead delivered disappointed families found a muddy field, a broken ice rink and fairy lights hung from trees have both been jailed.

      It seems a bit harsh but could this law not be used against the Tory party or perhaps of politicians in general when they deliberately deceive and fail to deliver as promised post election.

      Indeed does it apply to the insurance industry and many other state sectors service providers and businesses who act in a very similar manor.

      If I am promised a comedy program on radio 4 and just get the usual boring BBC left wing unfunny drivel can I just have the “comedians” jailed perhaps?

      1. lifelogic
        March 19, 2011

        Or perhaps the banks who pretend to be in the business of lending money.

        1. lifelogic
          March 19, 2011

          Or perhaps we should just jail Bill Gates for selling “time saving” computer software programs that crash endlessly, update endlessly and end up wasting vast amounts of millions of peoples time.

    3. norman
      March 19, 2011

      Agree on all your points. Any carbon tax other than the merest of token gestures will be a bad idea. Anything set at a level that companies will notice will deter new companies from coming here and, equally importantly, make existing companies think twice about expanding operations here. Indeed they will lower activity, as we all know very few politicians see a tax raise they don´t like so this ´hidden´carbon tax will only go in one direction.

      As for Cameron, I completely agree. He talks a good game when he has to, and I did think for a while he had seen the light that big government doesn´t work but his actions show only one direction.

      Currently in Brazil visiting family where I come every year and the progress they are making is staggering. Government tends to stay out of the way and it doesn´t half show. Our currency is also bombing, 6 years ago I could get R$6 to the pound, now it´s R$2.5.

      Big government is here to stay and it´s killing the UK.

  2. Alte Fritz
    March 19, 2011

    The government isl ikely to assume that manufacturers can always asorb higher cost, so whatever sops are offerred, the weight will be on the CO2 targets, and not on a low energy cost.

    One sees Japan’s problems shamelessly used to attack the nuclear solution. Perhaps we should lobby for more earthquake proof buildings, just in case? The unbearably smug Caroline Lucas raised cheap cheers on Question Time this week from an audience which seemed too dim to understand that the supply chain for most of what they wear and use each day stretched to China and other Far East countries.

  3. Fox in sox
    March 19, 2011

    Dear John,

    I share your concern about this carbon tax. Surely exporting our pollution with our jobs does no one any good.

    If we are to have a carbon tax then there needs to be a carbon import duty. This should be the difference between the exporting nations own carbon tax and our own.

    Chinese steel would pay the tariff at entry to the UK for example. Whether this would be permissable under EU law, and whether the extensive bureaucracy required outweighed any potential benefit is worth discussing.

    Windmills require a lot of energy intensive concrete and steel to produce. It would be adsurd to import them from China because we made our own energy expensive.

    Fight the good fight!

    1. Simon
      March 20, 2011

      I like your idea of import duties where there is a differential between working conditions and environmental costs .

      Rather than us giving foreign aid to China and India (their own money back?) let’s incentivise them to look after their own poor as we are expected to look after ours , and everybody elses who comes here thanks to our open door immigration policy .

  4. alan jutson
    March 19, 2011

    Why set a carbon tax at all, if the rest of the world is not doing so ?

    Yes we do have some leading, cutting edge businesses in this Country.


    I have to say it does make me smile about politicians clammer for a return to manufacturing, or businesses which involve the so called “blue coller worker” of the past.

    Not only is the high price of power going to be the problem, but also the skills shortage, the health and safety culture, employment regulations, the cost of land buildings, plant and equipment, and the lack of understanding of the Banks of such businesses.

    For a number of decades we have had governments of all colours encouraging people to get out of the dirty world where people use their hands to make things, school leavers were encouraged to go to university at almost any cost, (remember the 50% promise) no matter what their suitability, no matter what subject they studied.

    The traditional skills of our manufacturing and engineering industries, were rubbished in favour of the so called service industry. The result, we do now not produce anywhere near enough skilled people to even sustain what little is left. Most of the skilled engineers of the past have retired, or gone out of the industry due to poor wage rates relative to other jobs because their skills were not rewarded. They were taken for granted, because they existed in huge numbers.

    The government bleets on about apprenticeships, but a true apprentice in my day was indentured, had training over at least 5 years, whilst also attending college for either City and Guilds , HNC, HND or a similar RELEVENT qualification.

    Manufacturing plants take enormous investment to set up, need certainly a core of skilled workers to support the semi skilled, but above all need a product that is in demand and competitive on price. Such businesses take years, (decades) to establish themselves.

    The politicians/governments can use magic words, statements and even perhaps dream of a return to the bad olsd days of the skilled and semi skilled worker, but who is going to train them, most of us left the industry years ago.

    Past and current policy of letting in all types of workers, from all over europe is now steadily destroying our skills within the building industry, where a similar loss of proper skilled training (proper apprenticeships) will leave us once again without enough people to sustain any recovery in that industry, without importation of even more foreign labour.

    John, using the word apprenticeship for short term training courses, which produce very limited skills, with very limited use, is really an insult to those of us who in the past completed such intensive training.
    But then I am now old fashioned, (aged over 60) and probably an old fart as well.

    1. Simon
      March 19, 2011

      Quote “school leavers were encouraged to go to university at almost any cost, (remember the 50% promise) no matter what their suitability, no matter what subject they studied.”

      I cannot speak for other subjects but a course in computer science now will be more vocational that a course in computer science taken 30,20,15 years ago . The CS graduate will come out with less of an understanding of the fundamentals of the subject and more of an understanding of “tools” (vendor products) . This is a real missed opportunity for the UK as most other countries are making the same mistake .

      Quote “Most of the skilled engineers of the past have retired, or gone out of the industry due to poor wage rates relative to other jobs because their skills were not rewarded. They were taken for granted, because they existed in huge numbers. ”

      I find myself asking whether this was an accident or whether it was planned .
      The powers that be don’t have to win our hearts and minds . All they have to do is indoctrinate the young and wait till the rest of us become too old to do anything about it . Their strategy is proving very effective , they are winning .

      Our school children are being indoctrinated with EU propaganda .

      Could any of you with children or who teach please tell me whether the history taught in schools has been sanitised or revised to fit the EU masterplan yet ?

  5. Jose
    March 19, 2011

    Let’s get this straight, the carbon tax will neither create or sustain jobs for the UK. Within Europe we simply need to look towards Germany which has carried on doing what we used to be so good at, manufacturing things.
    Renewables won’t cut it so, to maintain a security of supply, there is only the nuclear option. The government should just get on with the original plans for enhanced nuclear power stations.

  6. Brian Tomkinson
    March 19, 2011

    JR: “It’s not an easy choice for this government.”

    It should be easy but this is a government still intent on peddling the myth that they need to act to “save the planet”. They seem happy to accelerate the rate at which the developing countries overtake us and we slip down into what used to be called “third world status”.

  7. Simon
    March 19, 2011

    Nicely summed up JR .

    Since many more nuclear power stations are being constructed around the World how about we construct more of the components here ?

    As it stands Japan Steel Works is still the only company with facilities to forge cores for larger nuclear reactors . The loan which Sheffield Forgemasters were after to build a press which could offer the same service on the face of it made business sense but nobody was interested in lending the money ; they wanted a stake in the company instead . The proprietor was not prepared to relinquish control and who can blame him when you see publicly listed companies run with short-term horizons and one eye on the stock price .

    The situation may be worse than the picture you paint .

    As a nation we are losing our place in the World and do not have enough left that other countries want in exchange for all the energy and food we will need in the future .

  8. Euan
    March 19, 2011

    The carbon tax idea is ridiculous. It’s based on a flawed premise that there is man made global warming which is not supported by real evidence but on computer models and bluster from those that stand to gain from it. We are in a time of increasing demand and declining oil, gas and coal supplies. It looks unlikely that all the planned nuclear reactors will go ahead now. Why does anyone think we need to tax energy more? The market will do that for us.

  9. Electro-Kevin
    March 19, 2011

    Like most important subjects there is no real and proper debate. We need to find alternative sources of power for the future otherwise life as we know it will end. The greenies and the new religion of climate change and sustainability are too extreme given the world population figures – unless a ‘green’ cull of humanity is their ultimate aim. We can’t all live as medieval peasants farming a strip of land and keeping chickens and moving about on horse/oxen drawn carts…..can we? Then there are the future ‘water wars’ as well as the conflict mass human migration PLUS religious dum-wittery will bring. When I watched Fireball XL5 and Thunderbirds as a child the future seemed BRIGHT! Where are the shiny suits, the flying cars, the increased leisure time, THE ROBOTS? What a world!

  10. Bill
    March 19, 2011

    Your comments spot on, but, in my view, it goes deeper. Even Switzerland has a good manufacturing base – for its size.

    Apart from a few world leaders – BAe, Rolls Royce (in 10 years I bet that they’re foreign controlled)

    We don’t have the infrastructure that, say, Germany has – can’t compare our car manufacturing to theirs – here its largely production lines, there its this +top end R&D
    They still produce ships! – Many of our yards are now Tesco’s.

    How do we get that infrastructure back? Impossible jumps to mind

    It goes back to the basic blocks of our society, how many of the Oxbridge engineers , go into accountancy (like me, did engineering degree – surveyed the landscape and thought accountancy would be a more stable career – then I was third rate , but the genius’s on the course went into the city)

    In 19C engineering was the thing to do ………… the toffs have gone back to the land.

  11. gyges
    March 19, 2011

    The pharmaceutical in the UK is on its knees; whilst environmentalism is a pernicious wealth transfer mechanism with wealth being transferred from poor people to rich.

  12. APL
    March 19, 2011

    JR: “When we want to buy trains, nuclear power stations or many consumer durables we usually today turn to imports.”

    Oh, why would that be? What is the common denominator among all those things?

    Trains: Nationalized by the government – run into the ground. then sold off.

    Nuclear: Nationalized by government – strangled by regulation, run into the ground and then sold off to a company which had thoughtfully put the brother of the then Prime minister on its board.

    Auto: Nationalized by the government – destroyed the distinct ethos of the British car manufacturers. Pumped in billions over decades in a futile attempt to prop up the industry – then sold off to foreigners.

    Steel: Nationalized by the government – pumped in billions to prop up the status quo in the face of dramatically changing world economic conditions. Broken up and sold off to foreigners.

    Shipping: Nationalized by the government – pumped in billions to prop up the shipyards, but gradually the economic reality was recognised ….. sold off.

    Common denominator? Government interference!

  13. ian wragg
    March 19, 2011

    As I said in a previous blog, Germany is commissioning 11,000 Megawatt of coal and lignite power stations this year alone.
    They have no intention of letting anything stand in the way of their sucessful manufacturing industry.
    They will be rubbing their hands if we introduce a carbon tax which they will ignore and continue to export to all and sundry

  14. forthurst
    March 19, 2011

    The Carbon Tax has two objectives: firstly to subsidise the transfer of our manufactuting industry to India (reference to an individual removed -ed_ The second objective is to provide a vehicle for those who work in
    the Financial Industry with the means to sustain their expensive lifestyles whilst not as usual adding value, but rather syphoning off the wealth of those with far less than themselves.

    Our Parliamentary democracy is pointless. We can change governments but we have no control over those who ordain the discourse determining what we are told to believe about our past, our present, our future and therefore how our governments should act.
    This discourse now embraces scientific hypotheses which are impossible, economic theories which are impossible, and an immigration policy which will lead to our abolition.

  15. oldtimer
    March 19, 2011

    A carbon tax is a nonsense idea. It will drive industry away from the UK. Combined with the equally absurd notion that renewables will provide for the UK`s future energy needs, it will make UK energy supply not only expensive but also unreliable. The CEO of the National Grid pointed out the other day that we must all look forward to energy rationing. Such is the poverty of the Coalition`s energy policy.

    We need only look at the present predicament of Japan, with the lost of a significant proportion of its energy capacity, to see the impact it will have on the lives, employment and well being of its citizens. One day the UK public will wake up to what is deliberately being planned for them and conclude that there are chumps in charge (in all three political parties)- and worse.

  16. Neil Craig
    March 19, 2011

    The “Green’s” opposition to CO2 free nuclear proves, beyond reasonable doubt, that they know their catastrophic warming story is a fraud.

    They are simply Luddites willing to use absolutely any lie to stop the march of progress, at least in the countries they dominate.

    If we allowed nuclear reactors to be mass produced and had regulatory costs not massively higher than those of all the other world industries, virtually all of which have a safety record over 1,000 times worse, we would have energy at around 1/10th the present cost.

    And we would again be the workshop of the world.
    All the industries John named are ones with high value to energy costs. The link between energy production & GNP is solid and Britain has the lowest energy production per unit GNP of any sizeable, non-third world, nation. That, with declining power supplies, we are, at best, in zero growth is inevitable. That we can get out out of it any time the government is willing to allow it follows automatically. That almost everybody in government is intellectually capable of understanding this seems almost certain.

  17. Lindsay McDougall
    March 19, 2011

    In the short term, we have no choice whatsoever. We have to reduce drastically both the government deficit and the trade deficit. Our recovery must be led by exports and by import substitution, which means UK industry and jobs come first. And industry can’t afford to pay more for its fuel than our European competitors.

    If we are serious about reducing CO2 emissions, we have to concentrate on measures that we know will work. These include reducing the world’s population, planting more trees and addressing the CO2 emissions problem in constructing the next generation of power stations.

    You are right to raise the issue of energy production and emissions during manufacturing. A friend of mine in the Green Party ties himself in knots over his motoring policy. He runs a small car but it’s an old banger. He could well afford to buy a much more modern, fuel efficient small car but hesitates to do so because of the emissions during manufacturing.

  18. Bazman
    March 19, 2011

    Not only are we exporting co2 emissions we are also exporting poor heath and safety and low wages. The high labour cost incurred by many companies are certainly not due to the amount of money going into the workforce pocket in my trade the rates are the same or less than they were in 1996. Less health and safety in the construction industry and metal trades is very foolish and would cost the individual and the state dear. Does anyone propose this?
    All the pro nuclear people need to look at the health and safety issues. The Irish Sea is the most radioactively contaminated in the world In spite of the prosperity Sellafield is supposed to have brought to the area, West Cumbria has the worst health records for heart disease and cancers in the whole of the northern region of the UK. Health officials are also concerned about the high incidence of thyroid disorders and skin cancers. The area has been declared a health action zone. Hoover bags have been found to contain radioactive isotopes only found in nuclear power stations.
    In Moscow and in particular Minsk in Belarus you often see people with moles or disfigurations that to my eye, and I make no clam to medical knowledge, look suspiciously nuclear related. The Soviets used reactors for heating and water in City blocks and of course there was the Chernobyl incident. The former USSR is a very dirty place by the way, due to little regulation of industry and pollution.
    In Britain I once lived in a street that when you looked down you could see the chimney of a waste incinerator/powerstation that was about two miles away. The cars in the street had faded paint on the panels that faced the chimney, all makes and models. You would see a fine dust on each car. The locals complained that there health had got worse since the incinerator was built. None of this would no doubt not stand up in a court of law.
    The question is in the right wing/Communist fantasy world of cheap labour, energy and with little regard for health and safety, how do you propose to pay for it all? Not with my health that’s for sure, so that leads to the desperate and ignorant being made more desperate. A race to the bottom that cannot be won. Do the anti health and safety people have the same views on nuclear health and safety? The difference is that these health and safety breaches could directly effect you instead of some hapless worker. We all have to die of something.. is the usual reply. That’s easy for you the say old man/woman…

  19. Martin
    March 19, 2011

    The trade deficit is the elephant in the room. Unless we address this problem by increasing manufacturing, by cutting costs not adding to them, by reducing the vast amount of costly and frankly worthless regulations, and the H&S culture, we are doomed to poverty. I am surprised that you don’t go on about this JR.You noramlly see things as they are.

  20. The Man
    March 19, 2011

    Some of us might perhaps believe a little more (easy, starting from zero non-belief!) if the EU set us an example by halting their ridiculously wasteful, polluting and nonsensical regular moves of lock, stock and barrel between Brussels and Strasbourg.
    I wonder if a ‘carbon minister’ would shatter like a piece of coal if struck by something as small as a common-sense thought based on a reality check of the world we all live in?

  21. BobE
    March 19, 2011

    We do have 600 years supply of coal

  22. Andrew Smith
    March 19, 2011

    The thought of powering a major industrial activity with the output from windmills is laughable.

    There would be vats of solidified metal as the supply of electricity was cut in low or high wind.

    There would be production lines grinding to a halt as power was turned off.

    The situation would be shambolic. A bit like the energy security of HMG.

    1. Simon
      March 20, 2011

      Your argument is falacious because nobody is actually taking the position of powering major industrial activity solely by windmills .

      It”s almost as laughable as saying that no source of energy should be even considered unless it can provide for all Britains needs .

  23. BobE
    March 19, 2011

    Andrew its worse than that. When the wind speed reduces then the frequency of the grid load reduces. If you get too low a frequency then your transformers blow up.
    All wind power has to be backed up by a continuous base load supply. Wind power is just a money maker for those that are subsidised by us to do it. Electricity is not like petrol, store it, use less use more. Electricity cannot be stored with any efficiency and must be produced as demanded.
    (I be this never gets inserted. Bit later for dear old JR methinks.)

    1. BobE
      March 19, 2011

      bit late, not bit later. 🙂

  24. Adam Collyer
    March 20, 2011

    “We have to replace the coal stations that will close thanks to the EU Emissions legislation come 2015, and to replace ageing nuclear stations near the end of their design lives.”

    Says it all really. While the Chinese busily go on building coal-fired power stations (with none of that carbon capture and storage nonsense by the way) the EU is closing down our power stations. Of course, the French want us to buy their nuclear stations to replace them. Fukushima has reminded us why that is not a good idea.

    Let’s build a future electricity supply system that includes gas and coal (and indeed the Severn Barrage) as well as more minor contributions from hydro-electric, windmills and assorted others. To do that, of course, we would need to leave the EU. So the Tories will never do it.

  25. Vanessa
    March 20, 2011

    We all know that the European Union wants to close Britain down and creating a Carbon Tax was a very good way of doing that. When G Brown said he would like our Co2 cut by 80% he had no idea what he was talking about. This would mean going back to BEFORE INDUSTRIALISATION! Did he really, with his EU friends, want everything Britain makes and designs and works for to be closed down to save carbon dioxide. And please stop talking about carbon – I thought diamonds were made of carbon and so is graphite – it is not a gas !!

Comments are closed.