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“Energy costs have contributed to Tata’s losses”
Often, the debate around energy costs focuses on “hardworking households”.
There has been a significant shift this week on the back of Tata Steel’s announcement that it will sell its entire UK operation.
Tata’s issue is the huge loss its UK arm is making. The Port Talbot plant is losing £1 million a day, while in the past five years its UK steel-making operation has lost £2 billion.
A large part of this problem literally comes from China, and the cheap steel being dumped into the European market, undercutting that manufactured in Britain.
However, energy costs – which energy secretary Amber Rudd has been pushing to see fall – have contributed to the losses faced by Tata and energy intensive industries (EIIs) more widely.
Responding to the steel crisis – which threatens 15,000 jobs at Tata – Decc has set out plans to exempt EIIs from the policy costs of the Renewables Obligation and the feed-in tariff. The move will be worth £400 million to the UK steel industry by 2020 and would come into force in 2017.
Business secretary Sajid Javid was singing from the same hymn sheet as Rudd, saying the government wants to address the high energy costs. “Help with energy costs has been one of the steel industry’s key asks and, having extended last year the compensation we are paying out, I want to see progress on exempting them altogether.”
This leaves one question: with EIIs set to gain further exemptions from policy costs, will the additional burden fall on domestic consumers?
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