Wednesday, December 25, 2024

The costs of net zero

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The messy contradictions of being committed to mutually exclusive policies are already starting to assail the Labour government.

Among the first difficulties is what to do about the Port Talbot steelworks in south Wales. The owner, Tata Steel, is proposing to close its blast furnaces with the loss of 2,800 jobs. It says the current method of production is financially unsustainable. The company proposes to switch to electric arc furnaces which are greener but employ far fewer people. This is just the sort of industrial development that Labour says it wants to see. 

Yet it is now calling on Tata to delay its closures pending further negotiations in a bid to prevent the job losses. New ministers are under pressure from union bosses to reverse the plans and pump more money into sustaining an uncompetitive, costly and environmentally damaging process.

This runs into another Labour manifesto promise which is to give workers more rights and re-empower the unions. How is it proposing to square these circles? The likelihood is that much more money will be paid to Tata on top of the £500 million already promised by the last government.

The new Business Secretary Jonathan Reynolds insisted this was not about “picking winners” and said that “decarbonisation does not mean deindustrialisation”. But that is precisely what it means and it is disingenuous to pretend otherwise.

During the campaign Labour avoided getting into the detail of its policies because it was unwilling to be upfront about their consequences. A special case can be made for underwriting steel production in the national interest. But this will be an early test for how Labour responds to the implications of decarbonisation.

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