UK energy crisis - live: Action on gas prices needed ‘now’, with factories ‘days’ from shutdown, industry says

·18-min read
UK energy crisis - live: Action on gas prices needed ‘now’, with factories ‘days’ from shutdown, industry says

Manufacturing industry leaders are demanding that measures to tackle rising energy costs are implemented “right now”.

They also said that factories, that rely on a huge amount of natural gas to keep running, are just “days away” from having to halt production because of the supply shortage and record-level prices of the gas.

Electricity prices have also shot through the roof as power stations use gas to generate electricity.

Dr Richard Leese, the chairman of the Energy Intensive Users Group (EIUG), told BBC Breakfast: “What we’ve done is lay out to government a winter package of measures that we think is needed to prevent those interruptions in supply chains occurring again.

“It’s needed absolutely right now – gas prices are at an unprecedented level and the businesses that manufacture the goods that we need are trying to operate under these unprecedented conditions.”

The industry’s “package of measures” include reviewing the “carbon costs placed on energy intensive users”, reviewing network costs within the UK, and emergency relief to “prevent lasting damage to very expensive plants and equipment” if any factories have to shut.

David Dalton of the British Glass Manufacturers Association said some companies were “days” from having to close temporarily.

They had talks on Friday with business secretary Kwasi Kwarteng but the meetings ended with no immediate solutions.

Key Points

  • Socialist MPs reiterate calls for nationalisation of energy

  • EU need more gas from Russia, says Kremlin-controlled media

  • Fracking proponents say gas price crisis is ‘bizarre state of affairs’

  • Manufacturing sectors ‘interlinked,’ group says amid gas cost rise

  • Government action needed ‘right now,' says industry group

  • ‘Real energy price crisis is in the Balkans’ – Bloomberg reporter

  • India plunged into power blackout as PM warned of ‘severe’ crisis

UK missed a trick on Russian gas contract, ex-ambassador suggests

17:28 , Liam James

The former ambassador to Russia has suggested the UK ought to have signed a contract for gas supply with Moscow 15 years ago.

Sir Tony Brenton said in a letter to the editor of The Times that he “witnessed Gordon Brown complain to [Vladimir] Putin about surging gas prices; the response was that our problem was self-inflicted”.

“Other countries avoided the vicissitudes of the market by entering long-term contracts; Britain did not,” he added.

He said Russia has fulfilled all its gas contracts for decades.

‘Not very much’ people can do to make homes more energy efficient

17:02 , Liam James

Energy price rises could be offset by efficiency improvements in homes, but there is “not very much” people can do for themselves, says the chair of an energy think tank.

Tom Burke, who co-founded the E3G think tank, said around 80 per cent of the 4 million UK households struggling to pay their bills are not eligible for the government’s Energy Company Obligation scheme, which gives grants for home insulation and other energy saving measures.

Speaking on the Today programme, he blamed inconsistency in the government policy for the lack of available options.

“In order to deliver those efficiency improvements to houses you've really got to build up the workforce to do that, the businesses to actually do the delivery.

“People have been certified ... got the qualifications and then found the government's changed the policy.”

“There’s never been enough money put into this, partly because it’s an un-headline attracting issue, but actually it would make the most difference.”

Ex-chancellor issues inflation warning

16:26 , Liam James

Norman Lamont, Conservative chancellor in the 1990s, has warned of the risks surrounding inflation and called for an interest rates hike.

He also said the government’s call for wage rises could further drive inflation.

Amid soaring energy prices and industry shortages, the pressure from rising prices is increasing as the pace of the recovery from the pandemic slows.

The Bank of England expects inflation to rise above 4 per cent by the end of the year, as its monetary policy committee holds interest rates at 0.1 per cent.

Lord Lamont, chancellor under Sir John Major, acknowledged that central bankers believe the current inflation rate is “transient” but warned “there is a risk of it getting embedded”.

“The danger is that inflation becomes embedded, it results in wage claims, public sector wage claims, and it becomes extremely difficult to reverse, and the longer you leave it in terms of putting up interest rates the more interest rates may have to go up and the faster they may have to go up,” he told BBC Radio 4's Today programme.

“I would personally be in favour of an interest rate (rise) now, but also the Bank of England ought to be considering ending, scaling back, its quantitative easing.

“This carries a risk of inflation in many people's eyes, it also carries a risk of a loss of credibility because it might look as though the bank is financing Government expenditure rather than just keeping interest rates down and smoothing the markets.”

Manufacturing sectors ‘interlinked,’ group says amid gas cost rise

15:44 , Lamiat Sabin

Different areas of manufacturing are “intrinsically linked” and the failure of one will affect the entire industry, EIUG chairman Dr Richard Leese said.

He told BBC Breakfast: “We’ve already seen the tip of the iceberg with fertiliser consequences – energy intensive industries manufacture goods throughout all supply chains, everything from minerals to paper goods.

“All of that is intrinsically linked, for example, when the fertiliser factory closed or paused, the CO2 is not just needed for food – we use it in the cement industry to supress explosion risk.

“Those goods are used throughout the supply chain, it’s all interlinked, so if one industry sector is affected, we’re all affected.”

Government considering ‘green’ levies on gas – The Times

15:30 , Lamiat Sabin

The government is reportedly planning to introduce new “green” charges on gas that could add £170 a year to gas bills.

A new strategy commits the government to cutting the price of electricity and imposing a levy on gas bills, The Times has reported.

The strategy will be published before the Cop26 climate conference in Glasgow next month.

‘No decisions made’ yet by government amid gas crisis – statement

14:45 , Lamiat Sabin

A spokesperson for the Department for Business, Energy and Industrial Strategy said: “The UK’s exposure to volatile global gas prices underscores the need to move away from fossil fuels to protect consumers in the long term.

“We want to encourage people to take up more efficient technologies such as heat pumps and electric vehicles by removing levies on electricity over time, working with industry to drive down costs of technologies and ensure they are as affordable as current options.

“We’ll set out our upcoming heat and buildings strategy shortly. No decisions have been taken on our approach.”

UK-India clean energy plan agreed amid national energy crises

14:10 , Lamiat Sabin

The UK and India had agreed on Friday plans to transform their power sectors to generate clean energy.

The meeting took place as both nations – among many countries – are reporting severe issues relating to energy supply and costs.

The UK has seen sky-high energy prices as a result of lower supply of natural gas, and parts of India has been plunged into darkness due to a lack of coal to fuel power plants.

The virtual meeting was held between British business secretary Kwasi Kwarteng and Indian union minister for power and new and renewable energy RK Singh.

The ministers spoke on the ongoing energy transition activities in their countries such as renewables, including solar, offshore wind, storage, electric vehicles (EVs) and alternative fuels, a press release from India’s Ministry of Power says.

The agreed on an action plan on power and clean transport, renewables, green finance and clean energy research as part of Roadmap 2030, which was launched by both countries’ PMs during India-UK Virtual Summit in May.

Countries using energy supplies as a weapon, defence secretary claims

13:29 , Andy Gregory

Energy supplies are increasingly being used as a “weapon” by foreign powers to put pressure on other countries, the defence secretary has said.

Ben Wallace's warning about “unconventional” weapons came as No 10 raised fears that a new gas pipe line being built by Russia could have security implications for the UK.

And closer to home, the French government’s Europe minister Clement Beaune threatened this week to use energy supplies as a way to “put pressure” on Britain to comply with the Brexit agreement, amid tensions over fishing licences.

Our policy correspondent Jon Stone reports:

Countries using energy supplies as a weapon, defence secretary claims

Lebanon runs out of electricity

12:54 , Andy Gregory

More international news for a moment, as Lebanon is plunged into darkness by a power outage expected to last for several days.

The country’s two largest power stations have been forced to shut down due to a fuel shortage, a government official told Reuters on Saturday.

Refresh our breaking story for updates:

Lebanon plunged into darkness ‘for days’ as country runs out of electricity

India plunged into power blackout as PM warned of ‘severe’ crisis

12:30 , Lamiat Sabin

India’s Prime Minister Narendra Modi was warned today that capital city Delhi could face a “severe” power crisis as it has endured a coal shortage for the “third month in a row”.

Delhi Chief Minister Arvind Kejriwal wrote to the PM to surge his government to take action to make sure enough coal and gas is delivered to power plants supplying electricity to the city.

He tweeted: “Delhi could face a power crisis. I am personally keeping a close watch over the situation. We are trying our best to avoid it. In the meanwhile, I wrote a letter to Hon’ble PM seeking his personal intervention.”

Today, millions of people in two northern Indian states – Rajasthan and Punjab – have been plunged into blackouts of up to four hours each after a number of power plants were shut due to the lack of coal.

‘Real energy price crisis is in the Balkans’ – Bloomberg reporter

12:13 , Lamiat Sabin

The energy crunch is biting harder in eastern Europe than in the West, a Bloomberg News journalist has said.

Chief energy correspondent Javier Blas said Kosovo’s largest exporter – the Ferronikeli nickel factory – has shutdown all production.

It comes as leaders in the British manufacturing industry warned today that some factories are just days away from shutting down due to record gas prices.

Albania’s government has declared a state of emergency and is today expected to announce energy emergency measures.

It comes after Serbia’s government warned earlier this week that it could choose to ban electricity exports during the winter to lower domestic power prices.

Manufacturers’ proposals on how to keep factories running

11:39 , Lamiat Sabin

Industry leaders have put forward three proposals to the government on Friday to avoid interruption to supply chains this winter.

They spoke with business secretary Kwasi Kwarteng, and warned him that electricity costs five times their normal levels were “not sustainable” for factories.

Dr Richard Leese, the chairman of the Energy Intensive Users Group (EIUG), told BBC Breakfast: “Winter cost containment measures looking at the carbon costs particularly that are placed on energy intensive users.

“There is partial relief to some energy intensive but it’s not widespread – we’re subject to qualification rules that are legacy rules from European Union membership.

“Our second measure is to look at network costs within the UK. Network costs are distributed differently to other European countries in terms of energy intensive industries getting a higher proportion of the network costs, and that’s something within Ofgem’s gift.

“The third measure is to look at emergency measures, should any of our energy intensive plants need to shut down rapidly, looking at the threshold for emergency relief to try and prevent lasting damage to very expensive plants and equipment.”

Factories ‘days away’ from shutdown due to sky-high gas prices

10:51 , Lamiat Sabin

Some manufacturing industry heads have warned that some factories are just days from temporarily shutting down due to the gas price crisis.

David Dalton of the British Glass Manufacturers Association said some companies were “days away” from halting production.

Gareth Stace, director general of UK Steel, told ITV News that, unless the government takes action, the steel sector will see “more and more pauses of production in certain times of the day and those pauses will become longer.”

Andrew Large, director general of the Confederation of Paper Industries, told ITV News that he could not rule out factories having to suspend production due to increased energy costs.

The industry heads held talks on Friday with business secretary Kwasi Kwarteng but said the meetings ended with no immediate solutions.

Price cap ‘not fit for purpose,’ say heads of energy firms

10:30 , Lamiat Sabin

Heads of energy suppliers have slammed the price cap for consumers as being “not fit for purpose”.

Today, they warned that customers will pay a “huge cost” for firms failing to keep afloat as gas prices hit record highs.

Paul Richards is chief executive of Together Energy, which he said is currently making losses.

He told BBC Radio 4’s Today programme: “The price cap as a mechanism is not fit for industry, nor is it fit for customers.

“When the converse situation arises and the wholesale price starts to drop sharply, the price that will be passed through to customers in April might feel like a very, very poor deal, whereas at the moment the price cap feels like a price that is too good to be true.

“Although customers are protected in the short term I think we’re looking at somewhere between £1 billion to £3 billion in costs that are going to be spread back across business and households as a result of these failed suppliers.”

Utilita Energy’s non-executive chairman Derek Lickorish suggested that the cap is reviewed four times a year.

He said: “The cap is not fit for purpose ... The government has to look at means by which they can support not only energy suppliers but also big industry.”

Socialist MPs reiterate calls for nationalisation of energy

10:10 , Lamiat Sabin

Calls for the government to nationalise the energy industry have intensified as the gas price crisis continued this week.

Today, former shadow Cabinet Office minister Jon Trickett said: “The UK should not bail out energy companies a single penny. We should be taking them into public ownership, immediately.”

Former Labour leader Jeremy Corbyn and MP Claudia Webbe both said earlier this week that “it’s time” to nationalise gas and electricity suppliers.

Labour for a Green New Deal said that nationalisation is the “only solution” to energy prices hitting record highs.

People in France have been partially protected from the soaring price of electricity in Europe because the vast majority of the country’s power comes from government-controlled nuclear plants.

Last week, the French government that it is able to postpone rises to energy prices until next April.

Most of the UK’s electricity is produced by power plants burning natural gas.

Weekend papers’ coverage of gas price crisis

09:51 , Lamiat Sabin

Here’s how the national newspapers covered the gas crisis on their front pages:

EU need more gas from Russia, says Kremlin-controlled media

09:30 , Lamiat Sabin

Russian state-owned media have taken the opportunity to report that Western Europe will not be able to survive winter without extra supply of natural gas from Russia.

London-based energy research and consultancy firm Wood Mackenzie has stated that the only way for “Western Europe to weather a cold winter will be through an additional influx of Russian gas,” Sputnik News reports.

Gas reserves built up over summer in Europe are projected to be at 78 per cent at the end of October – a record low, the website said.

Sputnik News adds that Russian state-owned gas company Gazprom supplies more than 40 per cent of natural gas in the EU.

In France, domestic nuclear energy accounts for most of the supply.

European leaders have been in a long-term negotiation with Russia and Gazprom to increase the supply of gas through the Nord Stream 2 pipeline that goes from Russia to Germany via the Baltic Sea.

Critics have said that Russian president Vladimir Putin is weaponising gas supply to get the EU more reliant on Russia.

Earlier this week, PM Boris Johnson’s spokesman accused Moscow of “choking off” supply to force up prices and put pressure on the EU.

Fracking proponents say gas price crisis is ‘bizarre state of affairs’

09:10 , Lamiat Sabin

Advocates for fracking are urging the government to look again at extracting shale gas, arguing that the controversial method could provide energy for the whole country for decades.

In 2019, PM Boris Johnson announced a moratorium on the hydraulic fracturing of underground shale rock amid concerns for safety, the environment, and earthquakes it may trigger.

As reported by the i newspaper, industry group Onshore Oil and Gas said the global gas price crisis was a “bizarre state of affairs” when gas beneath England could “meet the UK’s gas demand for 50 years”.

Anti-fracking activists from Friends of the Earth said that fracking was “rightly halted” two years ago, and Frack Free Lancashire said fracking “is still as unacceptable as ever given the geological and environmental conditions in the UK.”

Tony Bosworth, energy campaigner at Friends of the Earth, has told the paper: “The way out of the current gas crisis is not to produce more gas, but to insulate people’s homes and to increase deployment of renewable energy to reduce our reliance on expensive and polluting fossil fuels.”

Manufacturing sectors ‘interlinked,’ group says amid gas cost rise

08:50 , Lamiat Sabin

Different areas of manufacturing are “intrinsically linked” and the failure of one will affect the entire industry, EIUG chairman Dr Richard Leese said.

He told BBC Breakfast: “We’ve already seen the tip of the iceberg with fertiliser consequences – energy intensive industries manufacture goods throughout all supply chains, everything from minerals to paper goods.

“All of that is intrinsically linked, for example, when the fertiliser factory closed or paused, the CO2 is not just needed for food – we use it in the cement industry to supress explosion risk.

“Those goods are used throughout the supply chain, it’s all interlinked, so if one industry sector is affected, we’re all affected.”

Government action needed ‘right now,' says industry group

08:30 , Lamiat Sabin

Measures to tackle rising energy costs are needed “right now” the chairman of the Energy Intensive Users Group (EIUG) has said.

Dr Richard Leese told BBC Breakfast: “All across the energy intensive industries, they’re equally affected.

“We’ve seen the curtailment in production in the steel and fertiliser sector – that’s had a knock-on impact into the supply chains in the industrial supply chains and domestic supply chains.

“What we’ve done is lay out to government a winter package of measures that we think is needed to prevent those interruptions in supply chains occurring again.

“It’s needed absolutely right now – gas prices are at an unprecedented level and the businesses that manufacture the goods that we need are trying to operate under these unprecedented conditions.”

Energy prices ‘not sustainable’, factory businesses tell minister

08:05 , Lamiat Sabin

British businesses fear shutdowns of factories within weeks as fuel prices rise.

Yesterday, in an emergency conference call with heavy industries, business secretary Kwasi Kwarteng was warned that electricity costs five times their normal level were “not sustainable” for firms.

Andrew Woodcock and Anna Isaac have the full story

Fears of Christmas chaos as energy price spike sparks warnings of factory shutdowns

07:58 , Lamiat Sabin

Good morning. Welcome to The Independent’s rolling energy crisis coverage.

Stay tuned as we bring you the latest updates.

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