There’s No Such Thing as ‘Green’ Industry

BEN PILE

News this week emerged about the collapse of Swedish battery startup Northvolt. “Like many companies in the battery sector,” the failed company’s website explained, “Northvolt has experienced a series of compounding challenges in recent months that eroded its financial position.” European Governments, including those of Britain and the EU, have long claimed that as pioneers of green policy and the ‘transition to a low carbon economy’, their policies will cause domestic industries and the green economy to boom. But instead of the green dream turning into reality, across the continent there is only a bleak economic outlook and deindustrialisation. Given that so much of this was predicted, yet those predictions met with policymakers’ intransigence, isn’t it time to ask if this nightmare is a feature of green policy, not merely a bug?

Established in 2016, Northvolt offered battery cells “produced with 100% fossil-free energy” which “represent the most sustainable products of their type in the world”. These super-green batteries were a rival to manufacturers mostly based in China, which enjoy dominant market position, thanks to the low cost of energy (much of which comes from coal) and greater control over supply chains. The company claimed to have $50 billion worth of orders on its books, and, according to the FT, had raised $15 billion of investment. But “neither Sweden nor the EU had provided the company with much financial support”, says the pink newspaper, citing “substantial Government subsidies” that Chinese manufacturers enjoy.

Energy prices, which are the bind for most industries based in Europe, are not high in Sweden. They are the lowest prices in Europe and are competitive even with China’s. That is thanks to a number of factors, which are in turn owed to the country’s favourable geography. 29% of Sweden’s total energy demand (NB: energy, not merely electricity) is met from hydropower. Nuclear provides 20%, wind 14%, and oil 22%, and gas is barely used at all. Sweden’s low population of 10.5 million people live on a vast area, meaning that the country has a population density of just 26 people per square kilometre, compared with the UK’s 279, within which England has 434. We simply do not have the room, much less the geological features, that make hydropower viable as a source of power and as a backup for intermittent wind and solar power.

The statement would seem to suggest that the “lack of support” offered by the Swedish Government and EU to Northvolt would explain its collapse. But how much is this support really worth? According to a 2024 study by the US-based bipartisan think tank the Centre for Strategic and International Studies, Chinese state support for the entire EV sector, including batteries “cumulatively totalled $230.9 billion” between 2009 to 2023. That certainly sounds like a lot, but it amounts to about $15 billion per year, in a country of 1.4 billion people – little more than $10 per capita.

You may believe that it’s still a huge amount of money. But comparison is required for perspective. In the UK, political arguments for boosting the renewable power sector have long hinged on claims such as that it will create our own ‘green industrial revolution’, as epitomised by Boris Johnson’s 10 Point Plan. And because these forms of power generations are unable to stand on their own economic feet against conventional forms, they have required policies to guarantee ‘investor confidence’ – i.e., profits. Consequently, three subsidy regimes – Feed-in Tariffs (FiTs), Renewables Obligation (ROCs) and Contracts for Difference (CfDs) – have supported green power generation in the UK. According to analysis by David Turver, these cost us in excess of £10 billion (FiTs: £1.7 billion; CfDs: £2 billion+; ROCs: £7 billion) for the year 2022-23, plus an additional £2.46 billion for system balancing costs – a total of £13.2 billion. In dollars, this is $17 billion. In per-capita terms, that’s $249.

Britain’s own attempt to follow China – and Northvolt – with a ‘gigafactory’ famously fell flat on its face. Britishvolt was the intended beneficiary of £100 million ($129 million) of public funding, but collapsed in early 2023 after failing to secure the £3.8 billion of further private funding required to complete the project. The following year, despite having once been valued at £9 billion, UK-based EV firm Arrival also went bust.

The irony is inescapable. British and European policies have imposed emissions-reduction targets that require an increasing proportion of energy be produced from renewable sources in the belief that this will promote domestic industries. But this has pushed up energy prices for manufacturers, including those in the green technology sector, who are unable to compete with Chinese counterparts. The ‘green jobs’ have been created in China. China, meanwhile, does offer greater support to its industries, but far less than can really be used to explain Chinese battery manufacturers’ growth versus European manufacturers’ failure. In other words, Chinese manufacturing is subsidised at least twice: production in China, and purchase in Europe.

Criticisms of European policies’ failure to ‘support’ domestic industries draw from analyses such as the OECD’s surveys of state backing. In one such report, comparing government support for wind turbine and solar PV manufacturing in OECD countries vs China, for example, state support in the form of tax relief, grants and cheap credit are considered, as the following chart shows.

This would seem to be conclusive evidence of the basis for Chinese manufacturing’s ascendency. And indeed, it may be part of the story. But it is not the whole. The charts appear to show that Chinese state support for solar PV producers at an average of about 4% of firms’ revenues, and wind turbine producers at around 3%, and significantly less for OECD countries. But consider the support, as discussed above, for renewable energy generators, which guarantees investor’s profits through the subsidy regimes. As analysis from Net Zero Watch points out, the Beatrice Offshore wind farm was completed in 2018 at a cost of £2.2 billion, and before completing its seventh year of operation had received more than £1 billion of subsidies through the CfD mechanism. As NZW’s Director Andrew Montford pointed out elsewhere, “many windfarms get more than half of their income from subsidy” and “selling electricity is something of an afterthought”. That makes Chinese state support for its wind farm and solar PV producers look tight-fisted.

Yet this level of support has not produced a healthy domestic supply chain. Shares in Vestas Wind Systems have fallen by two thirds since the start of 2021, and Ørsted is down by a whopping 75%. Nordex is down by a third over the same period. As David Rose pointed out, shortly after those European-based companies’ share prices were peaking, and as Prime Minister Johnson declared that Britain would soon be “the Saudi Arabia of wind”, wind farm developers were seeking to cut costs by turning to Chinese producers – especially steel. Far from the 28,000 jobs in green manufacturing that were promised to Scotland, observes Rose, an FOI request revealed that just 1,700 turned up.

OECD analysis of Chinese state support for producers does not compare UK and EU state support for their customers. But that is an oversight for failing to recall the promise of British and European green policymakers that strict emissions-reduction targets, as well as things like the EV sales mandate, would incentivise domestic industries. Citing rising bills, the war in Ukraine and the ‘climate crisis’, a newly-appointed UK Secretary of State for Energy Security and Net Zero Ed Miliband signalled the Government’s continued commitment to the increasingly untenable belief driving 20 years of energy policy. In his ‘Great British Energy founding statement‘, Miliband claimed that “the answers to all these challenges point in the same direction: investing in clean energy at speed and scale”.

But the available evidence shows that this can only further emasculate British industry. Analyses that attempt to find growth in the UK’s and European green sector are blind to the consequences of green policy for other parts of the economy – especially industrial sectors. In China, support for industries might be slightly greater, but the greater factor driving disparity between Europe and the east is the deliberate harm done to conventional European industries in the name of green boosterism. Wind turbines need steel. Steel needs iron. And iron production needs mines. And refining iron ore needs cheap and abundant energy. And the supply chain, including the production of parts, needs wider ancillary industries. Green technology can’t exist in an industrial vacuum, economically, politically, technologically and even culturally isolated from heavy industry. There’s no such thing as ‘green industry’. There may well be seemingly ‘green’ products. But they are increasingly produced in economies that are not managed by eco-sociopaths. A different flavour of sociopath, perhaps. Or at least, certainly a different colour: red, rather than green.

There is no mystery to the failure of European and British green industries that are not the direct beneficiaries of absurd levels of direct government support. Northvolt seems to have failed, not because it did not enjoy support, but because European auto manufacturers began to pull orders after issues of quality and lack of capacity. While Chinese manufacturing and industrial policy are not constrained by green politics, and producers are mastering every aspect of industrial production from the mine to the showroom – including even green tech – European counterparts are beset by catastrophic Net Zero policies that require the industrial revolution be turned on its head.

I find it hard not to conclude that the destruction of European industries is the point of European green policies. How is it possible that so many EU and UK Government wonks have not observed an advantage to China’s factories created by their policies? How did they not notice that progress towards emissions reduction targets was only possible because of China’s industrial capacity? Perhaps they figured, for a while, that the dumping of solar panels onto European markets at least had the consequence of making solar power slightly cheaper. But then, how did they not notice that their promises of boosting domestic industries was turning into a lie? And now that car makers are beginning to collapse as a result of EV sales mandates, why does this not yield any reflection on the policy agenda?

Please check out the trailer for my film on Ed Miliband and the Net Zero agenda – currently in production – and if you can, please support the project.

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This article (There’s No Such Thing as ‘Green’ Industry) was created and published by Daily Sceptic and is republished here under “Fair Use” with attribution to the author Ben Pile

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