Green De-Industrialisation / Economic Warfare

A new pamphlet published today by Westminster think-tank Civitas, argues that the UK mineral products sector, which employs 70,000 people and is crucial to the UK economy, is being destroyed by emissions targets.

 

Britain’s £800m cement industry threatened by carbon reduction policies

Policies intended to reduce carbon emissions are destroying British jobs without making any difference to climate change. The aluminium smelting industry, for example, has been virtually eliminated by two major closures: in Anglesey and Lynemouth, Northumberland. Here we describe the impact on the mundane industries on which the nation depends: cement manufacture, chemicals, glass, ceramics and steel.

"UK Government should scrap plans for carbon price floor, exempt all energy-intensive industries from the climate change levy to the maximum extent permitted under EU directives, and abandon unachievable target of generating 20 per cent of electricity by renewable methods by 2020."

 

In the Civitas' pamphlett Kaveh Pourvand examines the £400bn a year mineral products industry, and warns that Britain has the highest carbon reduction targets in Europe, and that this is causing great damage to UK manufacturing.

 

EU legislation already adds “considerable costs” to energy prices. However, the UK’s current environmental strategy raises energy prices to high levels, even in comparison to the rest of the EU.

Unlike Germany, the UK does not currently legislate to protect key industries.

The cement industry is a very good example of an important UK EII that faces an uncertain future due to high energy costs. The £800m a year industry supports 17,488 jobs and maintains 12 cement production sites in the UK. It accounts for nearly ten per cent of the mineral product industry’s £9bn annual revenue. It is also consolidated, with five firms – Tarmac, CEMEX, Lafarge, Hanson and Quinn Cement – accounting for all of UK production. The production process is inevitably energy intensive. In a nutshell, it involves pulverising input materials, principally limestone, into powder which is then heated a very high temperatures of up to 1450c.

Consequently the industry incurs carbon costs through various UK and EU regulations.

The industry trade group, the Mineral Products Associations (MPA), estimates that these costs will be

€65m in 2013 alone, or over ten per cent of the industry’s revenue!

De-Ja-Vu

In the 1920s and 1930s, Germany set to work on forming a series of Cartel Agreements.

These agreements were aimed at damaging production of war materials in target countries, whilst giving Germany an ever-increasing dominance (via IG Farben) in the heavy industries.

It was done like this;

 

Henry Morgenthau Jr, US Treasury Secretary 1944.

"Under the Nazis, German business assets abroad never were considered as the private property of their owners but as a weapon of economic aggression, political intervention or military preparation for the German state.

One group would be kept operating at enormous loss (met by domestic subsidies) to draw a foreign nation's economy or part of it under German influence. Another would be commanded to use its funds for propaganda, espionage, sabotage, bribery or some- other form of political penetration. Still another would be the medium for stockpiling materials needed in the coming war — oil, rubber, nickel,tungsten, etc.

As one specific example, the production of magnesium in the
United States was limited by cartel agreements so that even under the spur of the defense emergency our output had gone up from 2,500 tons to only 5,680 while the Germans were turning out 19,000 tons. It was this sort of thing which prompted the Kilgore Committee to declare:

"Almost immediately, as a consequence of this unholy alliance between Germany and the cartelists, Germany's plans for economic warfare, aimed at ultimate world domination, were expanded. The German Government became a silent partner in the multitude of cartel agreements among German, American, British, French and other concerns with which German industry had established cartel relations.

Under cover of cartel agreements, Germany penetrated the economy of other nations, including the United States. Using their cartel affiliates or subsidiaries, German industrialists built up a network which impaired the production of other nations, obtained sources of foreign exchange for Germany, gathered economic intelligence and spread German propaganda.

In 1926 an international steel cartel was organized. At the time, Germany produced only 2½ per cent more pig iron than France.

 

The cartel agreement fixed the quota of each member, and each was to pay into a common pool one dollar for every ton it produced. But for every ton produced over the quota, the producer had to pay by way of a fine an extra four dollars a ton.

 

The French very thriftily kept within their quota and even cut production a bit now and then to save the dollar a ton. The Germans, on the other hand, seemed to have gone on a spree. They regularly exceeded their quota and cheerfully paid the fine. In one year it amounted to about $10 million for 2,500,000 tons excess production.

 

But it turned out that the Germans knew what they were doing. After a few years they argued plausibly that their increased capacity was so great that it entitled them to a bigger quota. Their increased capacity — second only to that of the United States by then —gave them the power to beat their European rivals over the head to get what they wanted. Their pig iron quota was raised, and by 1938 German steel production was 23,200,000 tons while France dropped to 6,200,000.

 

Without the cartel deal, the two countries would normally have developed along about the proportions of 1926.

 

Happening Again

 

The Civitas pamphlet advocates scrapping the Carbon Price Floor (CPF), the amounts companies will have to pay per tonne of carbon dioxide they emit, which is intended to come in in April 2013.

The CPF is unique to the UK, but the total amount of carbon emissions is set across the whole of the EU by selling carbon permits known as EUAs. The obvious flaw is that if Britain reduces its carbon emissions, the same net amount of carbon emissions are permitted across the EU anyway:

“…if British firms are dis-incentivised from purchasing EUAs, they would merely be left on the market for other European firms not subject to the CPF.”

 

So in other words, whilst British businesses play by the rules, they are run out of business by expense. As the UK reduces the amount of emissions it produces (as cement companies and steel and aluminium production become non-existant in the UK), the (former UK) emissions allowances can be used by another EU member. Like Germany.

 

The UK's de-industrialisation is to the benefit of Germany, which will continue to increase production, making other countries reliant on Germany for heavy industry. This was done on purpose before WW2, and as Germany effectively runs the EU, it is obvious why the EU supports this re-imagined version of the old Cartel Agreements system.

 

“Germany which also has ambitious emissions reduction targets but is careful to protect its heavy industry with significant concessions on energy costs, estimated to be €9bn in 2011.”

 

The UK Government has (laughably) set aside a £250m relief package for 2013 to help industry, but it is, argues Mr Pourvand, “…of too small a scale to make a difference.” Even if it were more substantial, threatened industries, including cement, are not even eligible for the relief."!

Germany is using the same system again, and whilst nations like Britain naively stick to the targets and reduce production (with a significant impact on the economy and ability to build war material), Germany happily continues growing her heavy industry, producing C02, and her Government pay the extra costs to their businesses of  €9bn in 2011 alone, knowing full-well other nations can't compete in this German game with a loaded dice.

We close business, they gain it. We reduce CO2 output, they increase it.

So not only does Britain lose the remnants of her heavy industry, with all of the economic and social effects linked to that outcome, but Britain will become reliant on Germany, becoming an importer of building materials (housing, ship building, arms manufacture, chemicals, dye stuffs etc etc).

 

A net importer of such materials has no independence, and no room to argue.

 

 

http://www.civitas.org.uk/economy/IdeasFEG2.pdf