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Energy-intensive sectors need a break

David Workman

For the past 16 years I have served two great industries, glass and paper, as director gen­eral of their respective trade associations*. These sectors have much in common. They are both energy- and capital-intensive, produce highly recyclable products and serve, as their main market, the packaging industry. They are also largely foreign-owned and increasingly controlled from head offices located abroad.

The one thing that has characterised the period since 2000 has been the huge increase in the legislative and regulatory burden faced by these, and other, energy-intensive industries. This has changed the way that their trade asso­ciations operate. They have, in effect, become issue management consultancies, collaborating closely in alliances with other trade bodies and NGOs both in the UK and the EU.

Partly as a result of this increased burden, both sectors have gone through a period of decline. This is particularly true of paper. Since 2000, more than half of the UK’s paper mills have closed and we now find ourselves in the unenviable position of being the world’s largest net importer of paper. Thousands of highly paid, skilled jobs have disappeared and the country’s balance of payments has taken hit.

Successive Governments have pursued a climate change policy at the expense of an energy policy based on security of supply at internationally competitive prices. The UK set the most ambitious climate change targets in the world, uniquely enshrined them into law, and then proceeded to introduce a be-wildering array of highly complex and costly measures to achieve them – all without con­sidering the consequences for the energy-intensive sectors.

This amounted to industrial vandalism on a massive scale and, ironically, has probably led to an increase in global carbon emissions while allowing the UK to claim success in reducing its own emissions. This is because our demand has increasingly had to be met through imports which contain embedded carbon.

By 2013-14 the Government had woken up to the fact that the backbone of manufacturing was crumbling, and it started to introduce measures to compensate partially or even exempt energy-intensive industries from the more damaging aspects of climate change policy

However, by 2013-14 the Government had woken up to the fact that the backbone of manufacturing was crumbling, and it started to introduce measures to compensate partially or even exempt energy-intensive industries from the more damaging aspects of climate change policy. It also started to engage fully with industry in the development of 2050 road­maps for the eight most energy-intensive sec­tors. These should be published in early 2017.

Both glass and paper have significantly increased their recycling rates in the past 20 years, but a lack of consistency in collection systems has left consumers bewildered about what can and cannot be recycled.

Industrial reprocessors have complained for years about the quality of materials being returned for new production. It is worrying that there seems, even today, to be an increase in commingling of waste materials from the household sector rather than source segrega­tion or kerb-side sorting.

Equally, the increased diversion of waste to generate energy is not the most environmen­tally beneficial way of dealing with household waste. If we are to develop a policy based on resource efficiency then there has to be a shift in emphasis towards quality in recycling policy.

The past few years have also, thankfully, seen a dramatic change in society’s attitude towards packaging. I believe there is now widespread acceptance that it exists to protect goods from damage in transit and helps to prolong shelf life in the food and drink supply chain. The emphasis has now, quite rightly, moved to the real villain: food waste.

The most momentous event of the past two decades happened only a few short months ago: the UK’s decision to leave the EU. I do not believe the ‘Brexiteers’ fully understand the extent to which UK plc has become dependent on foreign investment, and how much our eco­nomic success in the future is going to depend on that investment continuing.

In my view, this is only likely to happen if we can maintain tariff-free access to the EU’s mar­kets, especially for energy. The waste sector is among those that has become very dependent on foreign labour, so over-zealous efforts to restrict immigration could have a negative effect on the UK’s ability to maintain an effec­tive recycling infrastructure, capable of supply­ing the quality feedstock so essential for glass and paper production here in the UK.

For industries such as glass and paper, the expertise that exists within their trade associations is going to become even more valuable as the UK manoeuvres its way through the minefield of legislative issues that will need to be resolved as it lives outside the EU.

*David Workman was director general of the British Glass Manufacturers Confederation from 2001-10, when he joined the CPI

 

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