Government green energy policies are putting steel makers and other major electricity users at such a disadvantage that future investment could be diverted abroad.
The warning comes from Karl-Ulrich Köhler, boss of Tata Steel’s European operations, which include steel plants in Stocksbridge and Rotherham whose furnaces are powered exclusively by electricity.
Tata’s UK plants have been paying 50 per cent more for their electricity than competitors in France and 25 per cent more than competitors in Germany for the last year.
So far, the coalition government has failed to make good on promises to ease the burden for major energy users and new measures due to come in this April threaten to put them at an even greater disadvantage to competitors in continental Europe and around the world.
“Our biggest competitors are sitting right on the other side of the Channel and this regime gives them a material competitive advantage,” says Dr Köhler in a recent interview.
Dr Köhler says the Government’s environmental policies are causing “dangerous distortions” for major UK energy users.
While stressing that Tata Steel has no plans to cut jobs, he says that the cost gap caused by UK energy policy is equivalent to employing 2,000 people – roughly the number of people the group currently employs at its South Yorkshire plants.
Dr Köhler’s remarks echo warnings issued last autumn by Mark Broxholme, managing director of locally-based Tata Steel Speciality.
Mr Broxholme said in an interview with The Star that the electric arc route is already more energy efficient than other steelmaking processes used in the UK, but energy remained the business’s biggest worry.
“Of all the potential threats we see, the biggest is energy; in terms of security of supply, the cost of UK energy and international targets,” said Mr Broxholme.
“Everything else is on our own control. The UK is a great place to be – apart from its energy policy. The Government has to ensure there is a level playing field.”