Intensive industrial energy users to warn UK ministers over gas rationing

Some of Britain’s largest industrial users of energy will warn ministers on Wednesday that sections of industry are at risk of closure this winter if there is a severe gas shortage and emergency measures to curb usage are introduced.

The Energy Intensive Users Group, which represents the UK’s heaviest industrial energy users such as glass and steel, said many of its members could be forced to stop production if gas rationing is brought in.

A continuous supply of gas is critical for many energy intensive processes, notably glassmaking and ceramics manufacturing.

The warnings came as climate campaigners separately threatened the UK government with legal action over a recent consultation on chancellor Rishi Sunak’s 25 per cent windfall tax on oil and gas producers’ profits.

Heavy industry representatives will meet business secretary Kwasi Kwarteng on Wednesday to discuss the impact of the government’s emergency plans, in what one executive described as “the beginnings of some sensible planning”.

“Glass is one of the most exposed [sectors] as it is a continuous process that is heavily dependent on gas. We could only survive a matter of hours, maybe over a day but it wouldn’t be two days,” said Dave Dalton, chair of the EIUG and chief executive of trade body British Glass.

Ministers have so far played down concerns about Britain’s energy supplies this winter even though countries in mainland Europe have urged households and industry to reduce their usage in case Russia cuts off gas exports to the continent.

But analysts in the UK are nervous about what would happen in a particularly cold winter, given it has relied on supplies from Europe during events such as the 2018 “Beast from the East” cold spell.

“The view is that in the current situation it is unlikely there will be gas shortages but as we move into winter, things could change,” added Dalton. Industry was looking for “a bit more honesty” out of the business department “as to where they are in terms of making provisions [on gas rationing]”.

Rob Flello, chief executive of the British Ceramic Confederation, said that given the sector’s need for a continuous supply of gas, a “quick or short-notice shutdown carries the risk of extensive damage to the kiln”. “Robust contingency plans” were needed to ensure any shutdowns could be handled in a co-ordinated manner, Flello added.

Other sectors could more easily interrupt their processes but one industry executive warned it would still be “economically damaging to run things on a stop-start basis”.

Tata Steel, which operates two blast furnaces in Port Talbot, south Wales, said that “any sudden or significant shortage in supply of natural gas or electricity has the potential to impact our UK operations”, although it stressed that it had “robust operational plans” in place to ensure safety.

The Chemical Industries Association said the shutdown of its members’ facilities was a “complex process”. 

One government figure insisted ministers did not expect gas rationing this winter. He said that under Britain’s gas emergency plan, rationing was based on an “extreme” and “hugely unlikely” scenario in which Russia cut off all gas supplies to Europe and then Norway cut supplies to the UK as well.

Separately, climate campaign group Uplift warned the government it was prepared to seek application for a judicial review over what it claims was an “unfair and unlawful” seven-day consultation on draft legislation underpinning the chancellor’s new so-called energy profits levy on oil and gas profits.

Uplift opposes a new investment allowance introduced alongside the levy which will mean oil and gas companies receive an overall 91p tax saving for every pound they invest in boosting production in UK waters.

The group claims the allowance “appears to be a new subsidy for the fossil fuel industry” and the short consultation period was “wholly inadequate” to scrutinise “complex changes with such far-reaching consequences”.

HM Revenue & Customs said it “cannot comment on potential or ongoing litigation”.