Few topics compete with industrial energy prices for the level of misleading information and analysis they generate. The reality is that energy prices are rarely decisive in determining an industry's ability to compete, UK power prices in particular are high by international and European standards, but this has little to with Green climate policies and even less with Green policies imposed from Brussels. It may well reflect other issues in the way we have chosen to run our power sector. These deserve critical examination in any case.
Brussels attitude to energy intensive industry
David Buchan of OIES has commented on my blog on the UK steel issue, drawing attention to the link with Brexit arguments. His comment is worth repeating. "It is misleading to blame the EU for high energy costs related to renewable energy subsidies, when the UK’s own Climate Change act mandates more ambitious emission reductions than EU legislation, and to suggest that Brussels does not allow the UK to offset the extra cost of clean energy policies for energy-intensive industries."
David goes on “The Commission is keen to keep energy-intensive industries in Europe for the carbon leakage reasons you give”. It makes good sense, as I argued earlier, to encourage energy intensive industries towards countries capable of providing low carbon energy supply; currently this does not include China or Germany or India.
International comparisons are notoriously difficult, and a number of obvious explanations suggest themselves. These include the possibility of subsidies and cross subsidies in the German power sector, the de facto artificially low exchange rate that Germany enjoys within the Eurozone, and special factors such as shale gas impacting prices in North America. The figures also reflect the very different fuel mixes in the IEA, France benefiting very obviously from nuclear power. And of course there may be many other factors, including geographical endowments, differences in reliability standards, and forms of ownership with different demands for a return on capital employed.