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Britain's chemicals industry is heading towards extinction due to a combination of rising energy prices and carbon taxes, according to Sir Jim Ratcliffe, the billionaire owner of the petrochemicals group Ineos.
The company, which owns several petrochemical plants in Grangemouth in Scotland and co-owns the associated refinery, halted ethanol production at the site last week.
The 80 employees directly affected have been redeployed across Grangemouth's remaining chemicals operations, although Ineos said up to 500 indirect jobs would be affected across the wider economy.
The group said last March that it would stop ethanol production due to falling demand in Europe and increasing pressure from imports.
This process, one of only two in Europe, produced synthetic ethanol which is used in the manufacture of pharmaceutical drugs and other important medical applications.
“We are witnessing the extinction of one of our major industries, as the chemicals industry has squeezed life out of it,” Ratcliffe said.
He added that reducing manufacturing in Britain did not achieve anything for the environment. It's just shifting production and emissions elsewhere.
Enos She said the ethanol plant had been making losses for several years, particularly because of rising UK energy prices, which she said had doubled in the past five years and were five times higher than in the US.
“The costs that have particularly hurt us have been energy-related, because it is an energy-intensive process and the source is natural gas,” said Stuart Collings, UK chief executive of Ineos Olefins & Polymers.
At the same time, high carbon costs and pressures from cheap imports from countries such as Pakistan have added to the challenges.
“We've seen a shrinking market, falling prices, rising costs, and we've gotten to the point where it no longer makes sense (to continue in business),” Collings said.
This warning comes after the British Chemical Industries Association (CIA), the industry trade body, announced that… warned late last year That future investment was at risk as companies struggled with rising costs and falling demand.
She said that industry production has fallen by more than 37 percent since January 2021, citing official figures. Steve Elliott, chief executive of the CIA, said the sharp decline was mainly due to “the cost of energy and the associated cost and uncertainty around carbon”.
Although UK producers have long complained of paying higher energy costs than their European counterparts, industry on the continent faces similar challenges. More than 11 million tons of capacity It has already been announced to close between 2023 and 2024, according to European industrial trade body Cefic.
Ineos's Collings said the sector was seeing “lockdown announcements across Europe”. “What we are saying to the government is ‘wake up’.”
Ineos said it would like to see action in the UK on energy and trade policy, as well as on carbon costs. The new energy policy should provide “globally competitive prices for natural gas.” She said the current emissions trading scheme, where big polluters can swap “allowances” that allow them to emit a certain amount of carbon dioxide, was a tax on UK operators and favored importers who paid nothing.
Manufacturers are also awaiting the government's new industrial strategy. The CIA's Elliott said that while engagement with business “has been good, there is nothing yet that gives energy-intensive industries confidence that we will be seen as part of the solution.”
