Tony Lodge is a Research Fellow at the Centre for Policy Studies and author of The Great Carbon Swindle – How the UK hides its emissions abroad.
“Just last week we saw an 18-day run of coal-free days – something we haven’t seen since the dawning of the first industrial revolution.” So said the Government’s last energy minister in 2019, who parroted the claim that Britain was enjoying coal free electricity supplies for the first time since the Marquis of Rockingham was Prime Minister.
Sadly, it wasn’t true – and regrettably was therefore grossly misleading. New Centre for Policy Studies research shows the UK was in fact importing coal fired electricity from the Netherlands over this period (June 2019) via undersea cables known as interconnectors.
But why was this significant and what does it mean for wider energy, industry and climate policy?
Importing electricity and certain carbon intensive raw materials from overseas allows Britain to hide its carbon footprint. During last June’s “coal free” fortnight, whilst no domestic coal was used to power the grid Britain imported an estimated 40.4 gigawatt hours (GWh) of Dutch coal-fired generation. The emissions from this generation were (and are) consequently offshored into the EU and don’t appear on UK statistics.
The same is true in terms of carbon-intensive raw materials such as coal. The Government is now extremely reluctant to approve new mining projects. Yet this means that industrial consumers (such as the steel industry) are simply importing raw materials or finished goods from overseas, which can involve a significant extra cost in terms of carbon emissions.
The consequence is that when the UK claims to be reducing its greenhouse gas emissions, it is often simply offshoring them, for example by increasing its imports of electricity generated from European coal and gas while using statistical sleight-of-hand to ignore the carbon emissions involved. This not only hides the real picture in terms of emissions, but discriminates against UK firms which are subject to climate levies that their competitors overseas do not have to pay.
If it is to deliver on its climate change commitments and show transparent global policy leadership, Britain will need to deal with its most carbon-intensive imports – including electricity. Our new paper proposes the introduction of a new carbon border tax, restricted to specific carbon-intensive sectors.
This would provide a far more accurate picture of Britain’s true carbon footprint; deter carbon offshoring; ensure a level playing field for UK and overseas firms; and incentivise those overseas suppliers to lower their own carbon costs if supplying goods to the UK market. It would reduce global carbon emissions, and establish Britain as a policy leader ahead of the COP26 climate conference in November.
Though the UK’s ageing coal-fired power stations will all be closed by 2025, there will remain a market in Britain for between five and six million tonnes of industrial coal to supply the domestic steel, cement, brickmaking, chemicals, domestic fuel, horticulture and other sectors.
For example, the steel sector requires high-grade coals to operate blast furnaces at Scunthorpe and Port Talbot. Despite calls by the Government for new steel-making processes, it is unlikely that the blast furnace technique for raw steel production in Britain will change before 2040 at the earliest.
If you asked Extinction Rebellion, their answer would be to shut down the industry completely. Yet if this industry did not exist, we would simply have to import these products from elsewhere (wind turbines, after all, are largely made from steel). In any event, the Government says it is committed to encouraging and helping maintain a competitive steel industry in the UK as part of its Industrial Strategy.
It is fair to say that Whitehall is not keen on coal: applications in the UK to develop new mines have been repeatedly delayed by the Ministry of Housing, Communities and Local Government, even when they receive local planning approval. Yet the result is not that we are using less coal, but that we are transporting it over tens of thousands of miles from Russia, the USA, Australia and Colombia. This represents a significant offshoring of transportation emissions – without even considering issues around environmental or employment standards. Our paper shows:
The recent Conservative Party manifesto declared that “free markets, innovation and prosperity can protect the planet”. Then our solution is the perfect case study.
Indeed, not addressing carbon intensive imports means that Britain will continue to hide emissions off balance sheet, encouraging other countries to pollute while claiming virtue. At the same time, we will damage our own economy via carbon leakage. Retaining the status quo is in effect protecting and encouraging polluting exporters – a reverse protectionism for polluting industries in other countries, which increases global emissions.
A carbon border tax would expose and reduce carbon intensive imports, encouraging the private sector in the UK to invest in domestic industries and boost growth and skilled jobs in precisely the places where the Government is keen to see investment, such as northern England. It would also generate significant new revenue streams for central government from the monies raised.
The tax would force exporting states to reduce the carbon intensity of their energy grids; the higher their use of coal and gas, the higher the levy they face. This policy would lead to them reducing their emissions, the reshoring of jobs to Britain and increased energy security. It deserves serious examination.