A bit of metaphorical ink has been spilled recently, especially in sceptic circles, regarding the fact that the UK government’s publication (The UK’s Modern Industrial Strategy) appears to recognise both that high energy prices are strangling what’s left of UK industry and that the reason energy prices are high is at least in substantial part due to the cost of “green” levies to support renewable energy and the Net Zero project.
However, although I may have missed it, what I haven’t yet seen is any sort of detailed analysis of the contents of the report and of its implications for the UK’s energy strategy. It was only when I read Nils Pratley’s excellent report in the Guardian that I realised that this woeful government is – despite the noise and bluster – simply kicking the can down the road. Basically, having recognised that there is a problem caused by its core beliefs in net zero and decarbonising the grid, but unable to abandon those core beliefs, the government simply doesn’t know what to do. And so it opts for the worst of all worlds – carrying on with the policy that is causing the problem, while deferring any attempt to deal with the problems is is causing.
As Mr Pratley puts it:
…the new “British industrial competitiveness scheme” won’t arrive until 2027, which leaves an uncomfortably long period for more crises to occur. Shouldn’t the government have made up its mind by now?…
And so I thought I would take a look at the detail of the UK’s “Modern Industrial Strategy” and see what precisely it says. As is the way of these things, it takes 160 pages (including endsheets, foreword, executive summary, introduction etc). A word search tells me that it contains 149 references to “energy”, which might suggest an understanding that this is important when considering the UK’s modern industrial strategy. However, a more detailed word search tells me that it appears 56 times as references to “clean energy”. Apart from the obvious fact that there are very many ways in which renewable energy (which is what the government means when it talks about clean energy) is not clean (or green), it also produces an immediate conflict with the stated aim (from page 28 onwards) of reducing energy costs.
Starting at page 28 we find awareness of the basic problem:
Industrial electricity prices in the UK are significantly higher than those in most competing economies, particularly throughout Europe and North America. Energy-intensive firms paid twice the European average in electricity costs last year. This issue is one of the most pronounced challenges to the competitiveness of our energy intensive sectors and the attractiveness of the UK to foreign investment, albeit gas prices are comparable to those in the rest of Europe.
It’s interesting that this paragraph compares (unfavourably) our high electricity costs with those in Europe and North America, but when it comes to gas, they choose to compare our prices only with those payable in Europe, and ignore the fact that gas prices are significantly lower in North America. One can only assume that is because they acknowledged this fact, they would also have to acknowledge that it undermines Mr Miliband’s oft-repeated claim that there is no point in the UK using drilling for and using its own gas, because – as he claims – there is a global gas price.
It’s absurdly simplistic of me to rely on AI (though the UK government seems very keen on it). However, I note that when searching online for anything these days, the first result is always the AI version. Searching for a comparison between the price of natural gas in the UK and in North America, AI tells me:
Natural gas prices are generally higher in the UK than in the US. This difference is primarily due to the UK’s reliance on imports, while the US is a major natural gas producer.
Still, one doesn’t have to trust AI to be aware that gas costs significantly more in the UK than it does than in the US. There many websites, such as this that one can search to see this for oneself.
But I digress. Returning to the government’s “analysis”, we find that its focus is entirely on the need to speed up grid connections and to accelerate “decarbonisation” of the grid. This rather ignores the fact that – as Jit has shown – “The more of your electricity you obtain by harvesting wind, the more expensive it gets.”
Undeterred by reality, the document next claims:
Our wider stakeholder engagement has also highlighted the impacts of the unpredictability of UK energy prices compared to our international competitors, thanks to the prevalence of gas in our energy mix, which makes it harder for businesses to plan and invest.
Despite the document being liberally scattered with footnotes linking to studies, websites, academic findings etc., to justify the various claims made, I note the absence of any footnote offering evidence to establish the veracity of this particular claim. Still, the following paragraph does go on to grasp the essential problem:
If we are serious about being a leader in advanced manufacturing, net zero technology, and regional rebalancing, we must do what we can to address the uncompetitive cost of industrial energy.
I would query the reference to net zero technology, but leaving that aside, I think we can all agree that addressing the uncompetitive cost of industrial energy should be a vital part of any government’s modern industrial strategy. However, if that problem is to be addressed satisfactorily, then the government must first ascertain precisely why the UK faces such high industrial energy costs. Without that basic understanding, it is difficult – if not impossible – to take effective measures to address the problem.
Worryingly, it is at this point that the analsyis goes completely off the rails:
The Government recognises the strategic importance of tackling these barriers. This is why we offer price relief, through the British Industry Supercharger, for the most energy intensive companies and why we are reforming grid connections for generation and demand projects, which could accelerate connection dates for some projects by 5 to 7 years.
There are two immediate flaws in this analysis. The first is that using taxpayer funds to subsidise high energy costs for some energy-intensive industries might ameliorate the problem for the industry concerned, but it does nothing to solve the underlying problem that affects all businesses (and, for that matter, domestic electricity customers). As Nils Pratley observed:
…the tally of 7,000 firms in the new scheme is not enormous in the context of a broadly defined UK manufacturing sector of 140,000 companies. The hospitality industry and others grumble about how painful electricity bills also bite on them, but most within manufacturing sector will also be outside the fold. Food and drink manufacturers, which are still a substantial part of the economy, are not a priority, for example.
The second is that accelerating grid connections for renewables will exacerbate the problem, and will certainly do nothing to solve it. Another issue is that of talking the talk, but not of walking the walk. Thus, while we are told that “we also recognise the need to act quickly to support sectors with high-growth potential or significant exposure to high electricity costs”, there is no sign of any actual urgency on the part of the government to do anything about it.
The plan – which is better than nothing, though tackling the root cause of the problem would be a better plan – is to “[r]educe electricity costs for IS-8 manufacturing industries and foundational industries and increase support for our most energy-intensive industries”, but not before 2027, and then only up to 2030.
However, it’s when we see how this support is to be implemented that we realise that the cat is well and truly out of the bag:
Eligible businesses will be exempt from paying the costs of the Renewables Obligation, Feed-in Tariffs and the Capacity Market. The scheme will bring GB electricity costs more in line with other major economies in Europe, and level the playing field for GB businesses.
If that isn’t an explicit acknowledgement that it’s the renewables subsidies that are hiking UK electricity prices, then I don’t know what is. One might think that the obvious corollorary to this belated understanding on the part of the government would be a conclusion that the dash to decarbonise the grid – with its associated costs – should be brought to a shuddering halt, since this is the cause of the problem. Instead, we get this mind-numbing piece of stupidity:
These measures will be funded by bearing down on levies and other costs in the energy system. The Government also intends to use additional funds from the strengthening of UK carbon pricing, including as a result of linking with the EU carbon market.
This, however, won’t be introduced for at least another 18 months (the document talks of a possible implementation date of January 2027). The idea is:
…to ensure that highly traded, carbon intensive products from overseas face a comparable carbon price to those produced here. This is to ensure that UK decarbonisation efforts lead to a true reduction in global emissions, rather than simply displacing carbon emissions overseas. The UK CBAM will give industry the confidence to invest in decarbonisation in the UK knowing these efforts will not be undercut.
Well, good luck with that. Of course, all that means is that UK consumers end up paying more for all products affected by the CBAM, with unfortunate implications for inflation and the “cost of living crisis”. It will do nothing to make UK electricity prices, or manufactured goods, cheaper.
They also repeat that they intend to reduce grid connection waiting times for strategically important projects, even though this will exacerbate rather than solve the problem. Such projects will depend on the award of contracts under the Contracts for Difference AR7 (or AR8 et seq.), and we can see that these contracts are being awarded at ever-higher prices, which exceed the current market price.
There is also talk of moving forward with a zonal pricing model, where electricity prices vary by region, but this represents nothing more than moving the deckchairs on the Titanic. We will still be heading for the iceberg.
When we reach page 33, we are confronted by a section in a big box, presumably reflecting the government’s view of its importance. You’ve probably guessed how it’s headed: “Accelerating to net zero”. I really don’t know where to start with this stupidity. But perhaps this is as good a starting place as any:
…our net zero economy is already making a significant contribution to growth in the UK, rising by 10.1% since 2023, three times faster than the overall UK economy.
It obviously hasn’t occurred to them that this is because they have decimated the UK economy by shackling it to higher energy costs arising from net zero, and because the “net zero economy” benefits from substantial subsidies paid for by the rest of the economy. It would be a surprise if the economy didn’t react as it has done, but it’s far from being a success story, given that jobs in the regular economy are disappearing more quickly than they are appearing in the so-called green economy.
How about this?
There can be no plan for economic stability or sustainable growth that does not include a credible plan for net zero.
When you have core beliefs that are based on ideology rather than on real-world data, it’s remarkably easy to turn facts on their head.
The document rambles on for many more pages, but we’ve reached the end of the part that is relevant for current purposes. It continues to baffle me how they can conclude that the problem is urgent, but fail to do anything about it for 18 months or more; equally, how they can correctly analyse that the problem of high electricity prices is the cost of renewables subsidies, only to conclude that the solution is to double down on the policy that requires the subsidies to be paid at an ever greater rate. If I said that I despair, I think I would be guilty of under-statement.
Climate Scepticism 
Once again Mark you’ve produced a detailed, interesting, worrying and amusing analysis of an important report that most Clisceppers would be unlikely even to read. Many thanks.
LikeLike
After logging into wordpress, I shall attempt another reply, as my previous one was trashed.It seems to me that previous governments outsourced energy to the Climate Change Committee – who seem to be accountable to no one. I remember when the ‘Science, Innovation and Technology Committee’ would hold hearings in Parliament and would look at tricky issues, take evidence, and publish their record in full. Has the Climate Change Committee ever done that? Has any part of the CCC ever answered a single question in public?In my nightmares, earth is under alien attack in a dark forest scenario. Yet we don’t even know it. The alien attack involves paralyzing us in a matrix of indecision and a groupthink which believes itself to be as, all-knowing, consensus, but which has no intelligence directing it and no person in control – no one responsible, for the irresponsibility on show.
LikeLike
mark4asp,
Thank you for persisting. I have looked “under the bonnet” and can’t find your earlier attempt at commenting to be trapped in spam or pending, so I’m afraid I don’t know what happened to it.
I completely agree that one of the major problems that we face is the unaccountability of the Climate Change Committee. When passing the Climate Change Act, Parliament committed what I regard as an unforgiveable sin of creating the Committee and giving it great power without any real accountability. And with that power without accountability (or should I say, power without responsibility, the prerogative of the harlot?) also comes a certain arrogance. I wrote about it here:
https://cliscep.com/2022/11/02/net-zero-democracy-part-2/
I there transcribed an interview on BBC Radio 4’s PM programme, between Evan Davis and Lord Deben (aka John Selwyn Gummer), which I found quite appalling, but I think this was the revealing bit:
ED: Targets are pointless if they don’t actually lead to anything, you just keep revising the targets as you miss them. Do you think Rishi Sunak…
LD (interrupting): Well just a moment, you can’t revise the targets, because the targets are in the law, and they can’t change the law unless the Committee on Climate Change gives them permission, and we’re not going to.
ED: Oh, that’s interesting. Often we have changed the law when targets, child poverty, for example, we just, we missed the targets and changed the law.
LD: But unfortunately for those who would like that, you cannot do it under the Climate Change Act. The law says that once Parliament has voted for those targets they become statutory [sic] necessary, and unless you actually repeal the Climate Change Act, you can’t change those targets.
ED: Extraordinary. D’you know, I did not know that. Of course, you can sack the Climate Change Committee and appoint some other people, presumably, can you, Lord Deben…?
LD: Well, I, you can’t do that either, because…
ED (interrupting, laughing): This is so interesting!
LD: Happily, the Chairman of the Climate Change Committee is appointed, not by the Government alone, but by the First Minister of Scotland, the First Minister of Wales…
ED (interrupting): Right.
LD: …and the First Minister of the [sic] Northern Ireland. I don’t think you’d get them to choose precisely the person that you’d want for that purpose, do you?
LikeLiked by 1 person
Thank you Mark. I’m just going to quote that bit again:
As to the CBAM, a child could work out that it is destructive for the standard of living of a state that would enforce it. [No doubt this is something to do with the EU. Someone please correct me if I am wrong. The (absurd) carbon price has just risen because we are re-tethering ours to the EU’s, right?]
I can only think they misnamed this report, and meant to call it the Modern De-industrialisation Strategy.
LikeLiked by 2 people
By the way, in substance aren’t CBAM charges just a variant on Trump’s tariffs, that we have been told are a danger to the global economy?
LikeLike
“Miliband ‘robbing Peter to pay Paul’”
https://www.netzerowatch.com/all-news/miliband-industrial-strategy-critique
Net Zero Watch has belittled the government’s announcement that it will cut electricity bills for large industrial users by 25%. The campaign group has pointed out that the cost of the discount has to be paid somehow. Newspaper reports suggest that industrial gas users will be footing the bill, although details are scarce.
LikeLike
Can you belittle an announcement?
Yes, they are the same as Trump’s tariffs – targeting countries with a competitive advantage, and therefore a trade surplus, owing to their unreasonable use of fossil fuels.
LikeLike
Mark, you wrote, “It continues to baffle me how they [the UK government] can conclude that the problem is urgent, but fail to do anything about it for 18 months or more; equally, how they can correctly analyse the problem of high electricity prices is the cost of renewables subsidies, only to conclude that the solution is to double down on the policy that requires the subsidies to be paid at an ever greater rate.”
I wonder whether part of the reason for these enormous policy failures by the current and several previous UK governments is that, like large (but not all!) parts of the Western world, they have a green bee in their collective bonnet that gives them the tunnel vision of a monomaniac whose sole aim, despite the evidence pointing to the various huge costs involved [Ref. 1], is that the UK must become the Saudi Arabia of renewables technology adoption irrespective of whether their current preferred green technologies are sustainable or affordable – analysis by, for example, David Turver [Ref. 2] strongly suggests that they are neither.
If monomaniacal tunnel vision is indeed part of the diagnosis then the question needs to be addressed: how and why did this state of affairs arise and then come to be a dominant feature of the Western (especially UK) political landscape? Or, as you put it, Mark, why has the UK government been “unable to abandon those core beliefs”?
References
Regards, John Cullen.
LikeLike
John C,
It is baffling how we reached this state of affairs, isn’t it?
The government acknowledges (though a little furtively and shame-facedly) that the high cost of electricity is in large part driven by the high cost of renewables, and that this is an urgent problem for UK industry. Then it decides to do nothing about this urgent problem for 18 months, and the “solution” it intends to adopt includes making the situation worse by doubling down on renewables, while allowing a modest number of businesses to avoid paying some of the renewables subsidies – a “solution” which might help those businesses, but doesn’t deal with the underlying issue.
All this, while the USA is walking away from supporting renewables and the EU is seeking to water down its “green deal” commitments. When will reality bite? (That’s a rhetorical question, but I’ll answer it anyway – my guess is when it dawns on them that they’re facing annihilation at the next general election).
LikeLiked by 1 person
Mark, has it not been clear to many political strategists since almost immediately after the General Election a year ago that the Labour Party is and was rather unpopular – and becoming more so – and yet, all the leadership does, is (as you say) rearrange the deckchairs on the Titanic. Nobody in a senior position seems to have any idea where they are heading with energy policy except to drive the economy further onto the rocks; there is no ‘controlling mind’ at the helm, unless one can count Mr Miliband singing with his ukulele. And, unfortunately, as with so many policy areas these last two decades, parliament is totally inadequate to the task of holding the government to account.
We are in a bigly pickle, largely (but not entirely) of our own making. Fortunately the electorate seems to be aware of the country’s plight but has, thus far, been unable to elect a government that will actually break with the past rather than simply mouth platitudes about change. Will the next General Election bring the necessary definitive break? Or will the influences that have plagued us for years still have the whip hand? I am eager to find out … but I will not hold my breath.
Regards, John C.
LikeLike
John C,
We are indeed in a pickle. None of the mainstream parties deserve our vote, while the prospect of Reform government, (however pleased I would be to see its proposed abolition of net zero implemented) worries me greatly. If only common sense would return across the board, but they [the mainstream parties, plus Greens and nationalists of all stripes] all seem to be in thrall to the net zero dogma to greater or lesser degrees.
LikeLike
Mark, yes on both counts …
LikeLiked by 1 person
Lest anyone be in any doubt about the agenda to shift the cost of renewables on to fossil fuels, so as to pretend that renewables are cheaper, and to discourage fossil fuel use, look no further than this, which is fairly typical of the commentary today:
“Missing a trick on the cost of energy? Unpacking the latest moves from the Government and Climate Change Committee”
https://www.thriverenewables.co.uk/news/2025/06/missing-a-trick-on-the-cost-of-energy-unpacking-the-latest-moves-from-the-government-and-climate-change-committee
...You may be aware that the UK currently operates under a marginal pricing system, which means the most expensive source of power needed to meet demand – i.e. gas – dictates the price for all our electricity.
But, as well as the price of the energy itself, the Government requires energy providers to collect levies or “policy costs” to help fund Government initiatives. Because of how the Government has chosen to apply them, the majority of the levies associated with the transition to clean energy are currently added to electricity bills. This means that people are paying disproportionately higher amounts for electricity compared to gas, despite UK households consuming around three times as much gas each year.
Central to the recent industrial strategy was how it can reduce energy costs for big electricity users, with the Government stating that it plans to introduce a “British industrial competitiveness scheme” from 2027. The idea is that this will reduce electricity costs through exemptions from paying green levies such as the Renewables Obligation, which requires electricity suppliers to source a specific proportion of their electricity from renewable energy sources, and the Feed-In-Tariff.
Unfortunately, these interim measures do not support the long-term switch from fossil fuels to homegrown, clean energy. As the CCC has pointed out, what we need to see is the Government restructuring these levies all together, removing the legacy costs that have been placed on electricity bills and placing them on gas or into general taxation. It estimates that doing so would reduce the ratio of domestic electricity to gas prices from around 4:1 currently to between 2:1 and 3:1 – a ratio comparable to Ireland and France.
The energy transition requires us to migrate our heat and transport energy consumption from fossil fuels to electricity. If the levies were collected from fossil fuel consumption, electricity would be cheaper and the transition would accelerate….[My emphasis].
LikeLiked by 2 people
The author of that diatribe is seemingly unaware of the end point of his ploy – when the renewables can no longer be subsidised by fossil fuels, which have all gone.
LikeLike
“Labour has no answers to Britain’s economic slump
The government’s long-awaited industrial strategy is a weak rehash of familiar, failed ideas.”
https://www.spiked-online.com/2025/07/01/labour-has-no-answers-to-britains-economic-slump/
…But the detail of the policy tells a rather less promising story. It suggests the government could subsidise energy prices for just 7,000 electricity-intensive manufacturers. The government itself admits that these manufacturers only support about 300,000 skilled jobs – that’s just one per cent of Britain’s total workforce. Furthermore, the policy will not come into effect any time soon. There will be another two years’ worth of ‘consultation’ to decide which companies ought to be eligible for the scheme, with a ‘review point in 2030’.
The real kicker is that the subsidies will not be coming out of the existing tax take. Instead, they will be funded through vague ‘reforms to the energy system’ and, crucially, ‘additional funds from the strengthening of UK carbon pricing’. This implies that a few thousand businesses will have their electricity prices subsidised by higher carbon prices for at least some of the millions of other businesses in the country….
…
LikeLiked by 2 people
“The Renewable Industry’s Dirty Little Secret Has Just Been Exposed”
https://dailysceptic.org/2025/07/05/the-renewable-industrys-dirty-little-secret-has-just-been-exposed/
LikeLiked by 1 person