09:30 Caroline Nokes (Conservative)

I note that Portugal, a direct competitor for tile manufacturers, has recently introduced a 30% reduction in the network access tariff for the ceramics sector. That is just one example. Many countries around the world have taken such steps to support energy-intensive industries that have high costs. The industry’s electricity prices in the UK are some of the highest in Europe and are becoming uncompetitive. Additionally, although many of our manufacturers use electricity to generate heat, others who could switch to decarbonise are deterred from doing so by the high cost of commercial electricity on top of the capital investment that would be needed.

I am encouraged that the Government’s industrial decarbonisation strategy of April this year recognises the dangers and undesirability of simply offshoring production, or ceding it to competitors, as a route to getting the UK’s overall emissions down. Of course, the Government have devised the energy-intensive industries exemption scheme, which is great for businesses that qualify for it. Unfortunately, many of the industries in Staffordshire are excluded at the first hurdle from what the Department for Business, Energy and Industrial Strategy has dubbed the “sector-level test”. Specifically, that means businesses within NACE codes 23.41, 23.42 and 23.43, which cover household ceramics and ornaments, sanitaryware and insulators. Those codes need to join other NACE codes in the ceramics sector that, thankfully, are within the eligibility criteria—namely 23.20, which covers refractory products; 23.31, which is ceramic tiles and flags; 23.32, which is bricks and so on in baked clay; 23.44, which is other technical ceramic products; and 23.49, which is other ceramic products.

If we see the industrial decarbonisation strategy as a herald of the Government’s intention for a serious investigation of the longer-term measures needed to support industry as it transitions to lower-carbon energy, we need to look at how the parallel doubling of public research and development investment can benefit energy intensive industries. That will be necessary to improve efficiency, to encourage a move towards more electric firing and to develop hydrogen as the solution for the larger high-powered kilns where electricity is not an option.

I should note that one such improvement comes from switching from intermittent to continuous kilns. One of the dangers of today’s very high energy prices is that kilns may need to be shut down completely and then restarted, which is far more complicated and dangerous than it sounds, with wide-ranging consequences. However, innovation must continue. That means supporting the development of new technologies, providing incentives for large-scale investment in proven technologies, and creating a regulatory framework that supports decarbonisation alongside the international competitiveness of UK industry. Some of the new technologies are almost there, but there are issues to overcome. For example, we have to overcome tar build-up or moisture content, depending on the fuel innovation; resist corrosion for acidic kiln exhaust gases; and avoid emissions of nitrogen oxides.

The need to produce and distribute hydrogen on a large scale must be fully researched, not least because hydrogen is also being touted as a fuel of the future for everything from JCBs to trains, including the freight trains that will bring the fine white china clay into the Potteries and will hopefully take more products out in the future. The Government want demand for hydrogen to be high, so they must ensure that the market conditions are right for a ready fuel supply. Interestingly, I note that as part of the Government’s industrial fuel-switching competition, BEIS funded a £3.2-million project led by the Mineral Products Association and Hanson UK to trial a mix of 100% net zero fuels, including hydrogen, meat and bone meal and glycerine, for commercial-scale cement in Lancashire for the very first time this September. Let us see more of those sorts of trials covering more of our energy-intensive industries.

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09:49 Jessica Morden (Labour)

The reasons why we support our steel sector fall into even sharper focus following COP26. Indeed, there was welcome acknowledgement at the summit that the world cannot decarbonise without steel—whether it is for use in wind turbines, electric cars, energy-efficient buildings, infrastructure and much more. That is why it was all the more disappointing that nothing of note for steel was in the Budget, which UK Steel rightly called a “missed opportunity” and a “triumph of complacency”, particularly on support to help the industry to decarbonise. For example, there was nothing on industrial energy costs, even though we know that the move towards decarbonisation will require even more energy-intensive methods of steel production.

I asked the Prime Minister about this last week but did not get much of an answer, so I will put the question to the Minister: what is happening with the clean steel fund that the industry was promised? It was absent from recent announcements and last month’s net zero strategy paper, and when my hon. Friend the Member for Blaenau Gwent (Nick Smith) raised the issue in the main Chamber recently, he was referred to the industrial energy transformation fund, which is two years older than the proposed clean steel fund. It really feels like the Government do not know what is happening to it, and its absence risks adding to the growing gap between what is needed to decarbonise the sector and what is available in support.

It is worth saying again that the Government talk the talk on net zero and industrial strategy, but it is really not worth anything if steel is not at its core, as my hon. Friend the Member for Aberavon (Stephen Kinnock) will agree. When the Community union launched the “We Need Our Steel” campaign, the “We” it referred to was not just our world-class, highly skilled steelworkers, or communities such as mine, with industry at their heart, and all those in the supply chain. It also referred to government at all levels harnessing the potential of steel and using it to build back the economy after the pandemic, and to power a green industrial revolution.

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09:55 Dr Jamie Wallis (Bridgend) (Con)

I would strongly welcome more targeted Government support for hydrogen technology within the steel sector, to help our green transition to cleaner and more affordable energy. I was delighted to see the Chancellor’s announcement in the autumn Budget of £140 million to establish the industrial decarbonisation and hydrogen revenue support scheme, and the £240 million in the net zero hydrogen fund—but more needs to be done, working in conjunction with the steel industry.

I would welcome a commitment to work with international partners that are world leaders in exploring hydrogen technology, such as Sweden and the United States, to explore potential areas of co-operation. Investment in the green hydrogen-based steel demonstrator project via the clean steel fund requires more clarity, which I hope can be provided today. We ought to prioritise green hydrogen in the net zero hydrogen fund, with the goal of commercialisation.

Looking ahead, I firmly believe hydrogen is key to achieving the Government’s ambitious net zero strategy and to building a green economy, and that such technologies will be crucial for the future development and protection of our steel sector. Now that we have taken back control of our own laws, including those on state aid, we can and we should go further. Finally, more support for transition to a hydrogen-steel economy should be considered as vital in how we respond to the current major challenges to the steel sector.

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10:00 Stephen Kinnock (Labour)

Tata Steel is the largest private sector employer in my constituency, and the company is absolutely determined that there should be a future for UK steelmaking, while also recognising the importance of decarbonisation. It recognises that for UK steelmaking to enjoy a prosperous future, the industry needs support and partnership from the UK Government, first by working with the industry to manage a pathway to net zero on both public and private investment, but also by the Government levelling the playing field in order to ensure that the industry is competitive against its European counterparts.

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10:11 Jim Shannon (DUP)

Sustainable energy and greener energy debates are becoming more regular and I believe that it is important that we move with the times, which can start with ensuring that energy-intensive industries have the correct means to progress. Just this morning, probably coincidentally, but none the less importantly, I had the opportunity to meet the independent networks association. Its chief executive is Nicola Pitts and it is one of the UK’s leading independent utility network owners and operators, driving industry collaboration and innovation to shape the future of the UK’s energy and water sectors. It is in the business of ensuring that we can be more energy-efficient with electricity and the use of water, both for the industrial sector and for healthy homes—I chair the all-party parliamentary group on healthy homes and buildings. I commend that organisation.

That £139 million plant can process 120,000 tonnes of refuse-derived fuel, comprised of non-recyclable fractions of commercial and industrial waste per annum, to generate electricity and heat. Although I appreciate the extreme finance that firms will need to advance to this level, the benefits are much more energy efficient in the long term. When it comes to the net zero carbon targets, this is one that we should be aiming for. It is crucial that we take the future into consideration when discussing greener energy for our industrial firms. The Full Circle Generation facility in Belfast has aimed to process 140,000 tonnes of waste per annum, but it takes an initial 400,000 tonnes of rubbish for the facility to operate at full capacity. It is particularly exciting, innovative and futuristic; it is something we should be looking at.

The cost aspect is giving large firms little incentive to switch to cleaner energy strategies, but there must be more discussion between the BEIS Minister and the firms so that they can meet in the middle, because there needs to be a compromise sometimes. Perhaps the Minister could give us his thoughts on how that could be achieved. Additional funding must be allocated to help energy-intensive industries decarbonise. That is essential in ensuring that we meet our 2050 carbon zero promise set at COP26. As stated earlier, energy-intensive industries make a great contribution.

I call on the Secretary of State to ensure that priority finance is given to large industrial firms to give them that jump start in creating greener energy-intensive industries. The cost is a crucial aspect, and I would argue that it puts firms off improving their energy efficiency. There are small but useful steps that the BEIS Minister can take and, given our recent promises at COP26, I do believe these should be taken accordingly.

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10:17 Chris Green (Bolton West) (Con)

We have had a trend over many years of offshoring manufacturing and allowing other countries, perhaps with lower environmental standards than ours, to take our manufacturing industry. If we are looking at COP26 and the agenda that so many countries around the world focused on and championed, we have to recognise that in recent years we have been exporting manufacturing, therefore manufacturing jobs, carbon and other emissions for domestic consumption. We do not have the emissions in the UK, but we are still creating those emissions overseas.

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10:27 Alan Brown (Kilmarnock and Loudoun) (SNP)

It is a pleasure to serve under your chairmanship, Mr Efford. I congratulate the hon. Member for Stoke-on-Trent South (Jack Brereton) on bringing forward the debate. At the outset, he rightly highlighted the energy supplier crisis. I am sure he agrees that the Government need to do more about this crisis. He highlighted coal and the bygone days of coal, and certainly that should be a reminder to Government in terms of the lack of support that was given when the coalmines were shut down. It still has a legacy, and it is a legacy that lives on in my constituency. It is something that cannot be repeated, and that is why we need a just transition commission for the UK Government, like the Scottish Government have. We need that support as we move from a reliance on fossil fuel towards renewable energy.

The hon. Member for Stoke-on-Trent South is a vocal advocate for the ceramics industry, and he should be commended for that. I hope the ceramics industry has a strong future because we need to retain all the manufacturing that we can. Support like that is welcome, and hopefully the Government will listen. The key thing is that there needs to be support for decarbonisation. Other Members spoke about tariff reductions and reducing energy costs. Energy is too high at the moment, but the Government really need to be helping industry decarbonise, and proper investment and support from Government is required. That should put some of these industries ahead compared to those elsewhere. That is where, for me, the investment needs to come from Government to help them decarbonise.

We heard from the hon. Member for Newport East (Jessica Morden), who is clearly a big advocate for the steel industry. I was pleased to visit the works in her constituency, and I repeat: investment is needed to help the steel industry decarbonise. That is the future. We talk about clean green steel, and that is where Government investment is needed.

The hon. Member for Scunthorpe (Holly Mumby-Croft) is another advocate for the steel industry—I am kind of repeating myself here, but investment in clean green steel and decarbonisation is important. I commend her for being the only one who got something out of the Prime Minister’s speech on Monday other than Peppa Pig, so congratulations on that.

We heard from the hon. Member for Strangford (Jim Shannon), who always turns up at these debates and always makes a useful contribution. Again, he highlighted the importance of manufacturing and Government support for decarbonisation.

What I took out of the speech by the hon. Member for Bolton West (Chris Green) was that nuclear energy is indeed more expensive. He is an advocate of nuclear energy, but it is more expensive. We are talking about taking away tariffs for renewable energy, but nobody is talking about taking away tariffs for nuclear energy or addressing the eye-watering costs.

That inflexible reliability that comes from nuclear energy means that, while we talk about the wind not blowing, the amount of base-load it pumps on to the grid means having to curtail other, renewable energy sources, because nuclear is so inflexible. So no, I do not agree. That is the problem: nuclear is the wrong energy to mix with renewables, and it really is not the future.

I was talking about tariffs and the cost of nuclear energy. There is £1.7 billion in the Red Book just to develop Sizewell C, before we get to the final investment decision. Think what that £1.7 billion could do for the steel industry, the ceramics industry or decarbonisation—and that is only to get to the final investment decision, before the Government then rush to spend £20 billion on the capital investment for Sizewell C. Then that will be added to our electricity bills under the RAB—regulated asset base—model, for the 10 to 15 years of construction of the nuclear power station, and then a 60-year contract thereafter. So do not let us talk about taking away levies for renewable energy; let us look at what nuclear energy will cost us. I urge the Government to spend that money more wisely, rather than on nuclear energy.

I am coming to the end of my remarks, and I do not want to be too flippant, because this is a very important debate. We need to see support for ceramics and manufacturing, and we need to look at how we decarbonise. Carbon capture has been mentioned. I urge the Minister to reconsider the disgraceful decision to make the Scottish carbon capture cluster a reserved cluster. That should have been given the go-ahead and it should have been one of the track 1 clusters. It incorporates carbon capture, hydrogen production, which has been mentioned as part of the future of decarbonisation, and direct carbon capture from air. It is a really important, innovative cluster and it should have been given the go-ahead. Why was it not selected? I want the Minister to answer that. Equally, I would like to hear what proper investment will be made available to help and support the manufacturing sector to decarbonise.

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10:35 Dr Alan Whitehead (Southampton, Test) (Lab)

Secondly, the biggest challenge for the future, as mentioned by hon. Members, is how we decarbonise those vital energy-intensive industries so that they continue to produce in and for the purposes of the UK. We should not export energy-intensive production but decarbonise it, so that it continues to operate in the UK as effectively as it has done in the past. In that context, my hon. Friend the Member for Aberavon (Stephen Kinnock) pointed out that steel is not a sunset industry but very much an industry of the future. Our efforts to decarbonise such industries should not be seen as a means of closing them down or of removing elements of their activities because they are sunset industries and others can decarbonise. Our energy-intensive industries need to be decarbonised so that they continue to play a central role in future production.

It falls to me to remind Members that energy-intensive industries are not just about ceramics and steel. A little while ago, the Government helped energy-intensive industries with energy prices by exempting them from some levy costs. There was a list of 70 different sectors that are energy-intensive industries, including the manufacture of malt, the weaving of textiles, the casting of iron, the manufacture of batteries and accumulators, the manufacture of corrugated paper, rubber products, plastic products, technical ceramic products, cement, metal packaging and electronic wires, and metallurgy. Those are all energy-intensive industries across the country, not just in certain parts of the country, and they need our support on current prices and the need for decarbonisation. What I can say about prices right now—I think everyone present will agree—is that we absolutely have to tackle the harm that they are doing to energy-intensive industries, and the difficulties that such industries are experiencing.

At the same time, we also need to get serious about the support that we need to provide for the decarbonisation of energy-intensive industries. My hon. Friend the Member for Aberavon mentioned Labour’s £3 billion steel renewable fund, which is a fund not just to stabilise prices but to take steel well down the road towards decarbonisation by changing things such as electric arc furnaces, hydrogen production for the introduction of energy for steel generally, and a host of other things. They need to be replicated in those other energy-intensive industries with Government support, so that they can decarbonise in good time and good order and keep their production going across the country in a way that we need for the future.

That is a substantial task for the Government, both in the present and in the future, and very little has been achieved so far. I am sorry to have to say that, because it is so important that we get our act together right now and for the future, given the absolutely vital role that energy-intensive industries play in our country’s economy. I look forward to hearing from the Minister whether his Government have had a change of heart and are, perhaps even at this late stage, deciding to do something about price rises and the decarbonisation of energy-intensive industries for the future.

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10:45 The Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy (Lee Rowley)

The Minister mentioned the chemical industry. Does he understand that INEOS at Grangemouth is part of the Scottish carbon capture cluster, and at the moment INEOS is one of the biggest emitters of carbon dioxide in Scotland? The Scottish CCS would obviously alleviate that problem. Will the Minister look into that, promote the Scottish carbon capture cluster and take it away from being reserved, as it is classed at the moment?

I want to give my hon. Friend a couple of minutes at the end of the debate to wind up, but I have a couple of points on the long term. Obviously, we are in a long-term process of decarbonising our electricity grid. That continues and will have a real impact over the long term for energy-intensive industries, and elsewhere. There is a lot of work under way, a lot of schemes, a lot of funding and a lot of Government subsidy that has already been announced, such as the £315 million industrial energy transformation fund, £40 million of which has already been awarded, including to steel companies such as Celsa, to brick manufacturers, to glass and to metal casting. The second stage will close on 6 December.

On ceramics, my hon. Friend the Member for Stoke-on-Trent South will be aware of the establishment of a global centre for advanced technical ceramics, which is good news. We are also supporting some transformation in glass and there is extensive ongoing work on decarbonisation options, including in steel. We are working with trade bodies at the moment and look forward to announcements in due course.

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10:57 Jack Brereton

I also want to touch on the importance of levelling up in R&D investment. There is increased investment in R&D now, with a doubling of R&D spending in the UK. We need to see more of that being spent in the midlands, in the north and in Wales. A huge proportion of R&D spending has been in the south and other parts of the UK. We need to spread it out across the country, particularly for the energy-intensive sectors such as ceramics, which need that support to transition and to decarbonise, to secure those jobs for the future.

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