Committee publication · Correspondence · 12 June 2026
Letter to the Minister for Industry relating to energy costs and the Industrial Strategy, 12 June 2026
From: Business and Trade Committee
Inquiry: Industrial Strategy
Summary
The Business and Trade Committee writes to the Minister for Industry on 12 June 2026 following scrutiny of Industrial Strategy implementation. It raises concerns about energy costs driving industrial closures in chemicals, ceramics and other sectors, identifies perverse incentives in decarbonisation policy (reliance on carbon penalties rather than grants, ETS revenues going to Treasury rather than green schemes), and highlights the squeeze on gas-intensive industries with no relief mechanism or viable transition route.
Key findings
- Energy costs remain the greatest concern for energy-intensive industries; chemicals production fell 40% between 2021–2024, 40% of ceramics sites closed since 2003, and Tata Chemicals closed its last UK soda ash plant (104 job losses) with energy bills rising £4 million since 2020.
- The Industrial Energy Transformation Fund (IETF) has been withdrawn despite Department evaluation showing recipients viewed it as attractive; UK ETS raised £3.48 billion in 2024–25 but unlike the EU ETS has no requirement to recycle revenues into climate action, instead going to Treasury.
- Current policy relies on carbon pricing 'stick' without fiscal incentives ('carrot') for electrification investment, leaving risk that UK hits emissions targets through deindustrialisation rather than decarbonisation.
- Gas-intensive industries face volatile wholesale gas prices, rising carbon costs, and absent price relief schemes; electrification is not viable near-term (no hydrogen infrastructure, unaffordable grid connections, technology gaps); BICS eligibility rules create arbitrary differences (ceramic insulators qualify, ceramic tiles do not).
- Committee seeks government response on: reopening IETF; amending ETS revenues requirement; introducing gas-price relief scheme; timeline for Energy Independence Bill; schedule for breaking gas–electricity price link; further DBT–DESNZ discussions on removing net zero policy cost burden.
Tone
CriticalTopics
Key actors
Liam Byrne MP, Chris McDonald, Arjan Geveke, Rick Jennings, Adam Berman, Energy Intensive Users Group, Tata Chemicals Europe, Energy UK
Notable line
“… stick without carrot is not a transitional strategy. 5. The UK is out of step with competitor economies: Unlike other jurisdictions …”
Key Quotes
“… energy costs continued to rank as the greatest of his members ' concerns. He added that these pressures were "leading up to the point where…you start to see closures due to energy prices".”
“… carbon costs are seen as a means to invest, but what they really do is take several million pounds out of our operating profit”
“BICS is "a sticking plaster to a systemic problem".”
“"EU ETS recycles the money back into green schemes. Ours goes into the Treasury".”
“… that: There is no viable alternative. There are no hydrogen pipes at the ceramics factory. There is no free grid connection and technology that will get them through.”
“"completely withdrawn the carrot to help energy -intensive industries to decarbonise".”
Source · parliament.uk record ↗