Getting the {industry} to go inexperienced does not get low-cost – Telegraph is lastly waking up! – Watts up with that?
Reposted by NOT MANY PEOPLE KNOW THAT
March 18, 2021
By Paul Homewood
Once again we find that the media is finally waking up to the harsh realities of Net Zero. It’s a shame they figured it out for themselves years ago, before we committed ourselves to this nonsense:
UK factories produce 72 million tonnes of carbon dioxide a year – 16 percent of the UK’s total and a major obstacle to achieving the net zero target by 2050.
The decarbonization strategy announced by the government on Wednesday aims to reduce this by two thirds by 2035.
However, cleaning the factories and steel mills, which are responsible for large amounts of CO2, will be expensive. The strategy doesn’t show what the bill will be. This has deeply worried the industry – especially as it seeks to recover from the economic impact caused by the pandemic.
Despite the £ 1 billion headline cited by the government on “reducing emissions from industry and public buildings”, it is unclear whether the strategy contains any new money.
Instead, it details where previously announced funds will be used in areas such as green heat pumps and insulation in buildings, how to make steel from clean hydrogen, and instructing the business to switch to renewable energy and adopt carbon capture technology.
That worried the industry. “It’s more of a letter of intent than a set of guidelines,” said Steve Elliott, chief executive of the Chemical Industries Association. “It’s a lot of ambition. The next step would be workable political action. “
In addition to the costs of switching to new technologies, there are other costs. The strategy is about driving demand for low carbon products and possibly labeling them. This could result in costs.
Such a system, detailing the “carbon intensity” of items, would be voluntary at first, but it forces companies to delve deep into their supply chains to understand the products’ carbon footprint and possibly strangle them with bureaucracy.
New customs controls as a result of Brexit have shown companies how difficult and expensive such work can be.
MakeUK, the trade organization that represents manufacturers, is concerned about the impact. “Manufacturers have long and complex supply chains, so collecting carbon footprint data is not without its challenges,” said Verity Davidge, policy director. “We’re behind net zero, but companies are already juggling the effects of Covid and managing the new relationship with the EU.”
Steel is the sector in the line of fire most. The strategy even highlights the Port Talbot and Scunthorpe steelworks and states that “these two locations alone produced 11 million tons of CO2 in 2017 – 15% of total industrial emissions”.
Two years ago, the government announced £ 250 million to help the sector clean up, such as developing hydrogen-powered steelmaking instead of traditional blast furnaces, and £ 140 million to boost hydrogen production.
However, this will not be enough for the sector to go green. Chris McDonald, General Manager of the Metals Processing Institute, estimates that decarbonizing UK steel mills would cost between £ 6 billion and £ 7 billion, assuming they were replaced with new equipment. According to Eurofer, the entire steel industry in the EU and the UK, which will go green by 2050, would increase production costs by 35 to 100 percent per ton.
“It will be a huge challenge to fundamentally change steel production,” warns Gareth Stace, director of UK Steel, and is already warning his energy-hungry industry of higher costs than the competition in Europe.
To encourage investment in clean steel in the UK would require solid political support to ensure there is a market, such as public procurement reform so that domestically produced steel is at the top of the queue for major projects in the UK.
Economy Minister Kwasi Kwarteng proudly trumpeted the plans, noting that Britain was “the first major economy to enact decarbonization laws” and “the first to take steps to have its own low-carbon industrial sector”.
But there are risks involved in going first. Although other countries are likely to follow suit until new technologies are developed and inexpensive, industries can shun the UK for locations with loose regimes, and consumers can choose cheaper products made using more polluting methods.
The strategy recognizes what is known as a “carbon leak”. It mentions ‘funding strategies to reduce the cost of decarbonisation’, systems to pass costs on to consumers and even border controls when other countries are slower to become green.
According to David Reiner, professor of technology policy at Cambridge University’s Judge Business School, civil servants are “sensitive” to carbon leaks, but the government needs to top up the money as what is now available is only enough to fund studies. “The announced funding is just a down payment,” he says. “In the not too distant future, it will have to be confirmed what is actually on the table.”
But it couldn’t be as bad as it seems, says Reiner: “A few years ago it might have been risky to aggressively crack down on heavy industry, but as more economies become carbon neutral, it’s more likely that others will try to learn from this process. ”
The government hopes decarbonization will fuel its green industrial revolution and create 80,000 jobs as industry realizes that it must invest once no country is allowed to escape strict environmental controls.
“The chances of the green transition are enormous,” says Greg Archer from the Transport & Environment lobby group. “Every country goes the same way, just at different speeds. We can gain a competitive advantage by being the first to sell our know-how internationally. “
It is this hope that has turned Prime Minister Boris Johnson and Kwarteng into climate activists. A green industrial revolution may not be just a soundbite, but a business plan.
“It’s pragmatism,” says Roz Bulleid from the Green Alliance. “The public demand for decarbonization is strong, so there is a political incentive. We are seeing decarbonization around the world, so there is also a business motive. “
Douglas McWilliams from the CEBR Economic Think Tank is still not convinced. “There is a massive assumption that a country with only a fraction of the world’s population will find ways to solve these problems,” he says. “It might be cheaper to let others do that and then use the technology.”
https://www.telegraph.co.uk/business/2021/03/18/getting-industry-go-green-will-not-come-cheaply/
Unsurprisingly, the Green Alliance still prefers La La Land, but it is evident that those who actually understand economics and business are finally beginning to become aware of the dangers. Whichever way you look at it, the bill will be massive and someone will have to pay.
Take the steel industry, for example. At Port Talbot, owned by TATA, it was estimated that reducing emissions, either by converting to hydrogen, adding carbon storage or switching to electric arc furnaces, would cost at least £ 2 billion on the site itself, plus huge sums for infrastructure elsewhere Job . Why on earth would TATA want to spend that kind of money on a company that is now struggling to make a profit? The same goes for Scunthorpe, which is owned by the Chinese.
And it’s not just the colossal cost of capital that would be incurred with any transition. Decarbonization will inevitably increase the operating costs of the industry and put it at a permanent disadvantage for overseas competitors.
As the article also points out, the issue of carbon leakage will also be very problematic, crippling the red tape in monitoring supply chains.
The report also highlights the previously extremely naive media that seemingly assumed that all of this decarbonization could have been achieved for a billion or two billion people. As this blog has often pointed out, the billion listed is nothing more than a bit of seed capital for pilot projects, R&D and the like. The media in particular are still not convinced that hydrogen costs many times the cost of conventional energy sources.
There also seems to be a desire that the rest of the world will come and buy our goods if we jump first because they are “green” – “The chances of the green transition are enormous,” says Greg Archer of the Transport & Environment lobby group . “Every country goes the same way, just at different speeds. We can gain a competitive advantage by being the first to sell our know-how internationally. “
It’s far more likely that our industries will simply migrate to another location where the cost is cheaper. Even a carbon import tax will have little impact on this.
The only justification offered by politicians from all parties increasingly revolves around all of these wonderful green jobs that are about to be created. But who will pay the bill for them?
Finally, let’s look again at the statement made by the CEBR employee:
It is widely believed that a country with only a fraction of the world’s population will find ways to solve these problems. It might be cheaper to let others do this and then take advantage of the technology. ”
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