Britain’s Chemical Industry: A Looming Extinction
In a world where industries are evolving rapidly, the chemical sector in Britain is facing a dire threat. Sir Jim Ratcliffe, the billionaire behind Ineos, a major petrochemical group, has issued a grave warning. The high energy prices and carbon taxes are pushing the country’s chemical industry to the brink of extinction.
Here are the key points to consider:
- Ethanol Production Halted: Ineos recently ceased ethanol production at its Grangemouth site in Scotland due to diminishing demand in Europe and pressure from imports. The move affected 80 employees directly, with up to 500 more roles in the wider economy at risk.
- Rising Energy Costs: High energy prices in the UK, which have doubled in the past five years and are significantly higher than in the US, have plagued the industry. The energy-intensive nature of chemical manufacturing, coupled with natural gas as a primary energy source, has led to significant losses.
- Carbon Costs and Imports: Additionally, the industry is grappling with high carbon costs and fierce competition from cheaper imports, particularly from countries like Pakistan. This has resulted in shrinking markets, lower prices, and higher operating costs.
- Industry Decline: The Chemical Industries Association (CIA) reported a 37% decline in industry output since January 2021, citing escalating costs and dwindling demand as significant contributors.
- European Challenges: The industry’s challenges are not unique to Britain. Across Europe, chemical companies are facing closures and capacity reductions, signaling a broader crisis in the sector.
Ineos is urging the government to take action. They are calling for a revamped energy policy that provides globally competitive natural gas prices, as well as reforms to carbon costs and trade policies. The current emissions trading scheme, characterized as a burden on UK operators while favoring importers, has left manufacturers in a precarious position.
As the industry awaits the government’s new industrial strategy, uncertainty looms. While there have been positive engagements with businesses, energy-intensive industries like chemicals are seeking concrete solutions and policies that will secure their future.
The time to act is now. The looming extinction of Britain’s chemical industry serves as a wake-up call. Urgent measures are needed to address the challenges plaguing the sector before it’s too late. The government must step up and support these critical industries to ensure they remain viable and competitive in the global market.
