The Great Energy Displacement – Part Three

The Deindustrialisation of Britain

Britain’s industrial electricity consumption has fallen to its lowest level since 1983. The question is whether this proves that we have made industry dramatically more efficient—or whether too much of the industry has simply gone.

“Part Two” (https://hopetosaveourcountryside.com/2026/08/11/the-great-energy-displacement-part-two/) examined the difference between planned capacity, installed capacity, actual generation and dependable power. It showed why headline gigawatts cannot simply be treated as electricity available whenever Britain needs it.

Part Three applies the same discipline to demand.

Lower electricity demand can result from genuine efficiency. It can also result from reduced production, recession, factory closures or the relocation of manufacturing overseas. These outcomes may look similar on an electricity chart, but economically, strategically and environmentally they are completely different.

Britain has not stopped consuming steel, chemicals, fertiliser, cement, paper, glass, fuels and manufactured goods. Increasingly, however, it has stopped producing them.

That is the next stage of the Great Energy Displacement.

The demand that disappeared

The latest official figures should stop us in our tracks.

According to “DESNZ’s Digest of UK Energy Statistics 2026” (https://assets.publishing.service.gov.uk/media/6a6a35c50ddb7e4831c629ed/DUKES_2026_Chapter_5.pdf), total UK electricity demand increased by 1.2% in 2025. Domestic and commercial consumption both rose.

Industrial electricity consumption moved in the opposite direction. It fell by another 2% to 76.7 terawatt-hours—the fourth consecutive annual fall and the lowest level recorded since 1983.

The longer-term decline is even more striking. “DESNZ’s Energy Consumption in the UK statistics” (https://www.gov.uk/government/statistics/energy-consumption-in-the-uk-2025/energy-consumption-in-the-uk-ecuk-2025) show that industrial energy consumption fell from approximately 62 million tonnes of oil equivalent in 1970 to 19.5 million tonnes in 2024.

That is a reduction of almost 69%.

Some of this is genuine progress. Modern motors, furnaces, controls, lighting systems and production processes use energy more efficiently. Britain has also moved towards higher-value sectors such as pharmaceuticals, aerospace and specialist engineering.

But DESNZ does not attribute the fall to efficiency alone. Its explanation also refers explicitly to Britain’s move away from traditional manufacturing.

That distinction matters. A factory making the same output with 20% less electricity is an efficiency success. A factory consuming no electricity because it has closed is not.

The fall in industrial demand also affects how the electricity transition is presented. A rising renewable share can result from more renewable generation, but the percentage is also influenced by the denominator against which it is measured. If steelmaking, chemicals, refining and other energy-intensive production shrink, the remaining electricity system becomes easier to describe as “clean”—even though Britain continues consuming the products those industries once made.

This does not invalidate renewable generation. It changes the meaning of the claim. Britain may be decarbonising a smaller industrial electricity base while simultaneously planning to electrify transport, heating, data centres and other parts of the economy.

The electricity Britain appears to need today is therefore not necessarily the electricity a reindustrialised Britain would need tomorrow.

The price of making things in Britain

Britain’s industrial decline began long before the Climate Change Act. Global competition, automation, exchange rates, financial crises, ageing plants, corporate ownership, underinvestment and overseas subsidies have all played a part.

It would be wrong to blame every closure on climate or energy policy.

It would be equally wrong, however, to deny that Britain’s energy-price structure has intensified the problem.

In 2024, the UK had the highest average industrial electricity price among the 25 countries that had reported to the International Energy Agency. The UK price, including taxes and levies, was 26.63 pence per kilowatt-hour, compared with an IEA median of 16.33 pence. Britain was therefore approximately 63% above the median. These figures are recorded in the Government’s own “UK Food Security Digest” (https://www.gov.uk/government/statistics/united-kingdom-food-security-digest-2025/united-kingdom-food-security-digest-2025).

The “Office for National Statistics” (https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/theimpactofhigherenergycostsonukbusinesses/2021to2024) found that the average electricity price paid by UK non-domestic users rose from 14.81 pence per kilowatt-hour in the first quarter of 2021 to 25.97 pence by the final quarter of 2024—a rise of approximately 75%.

Gas prices more than doubled over the same period.

During this period of sharply higher energy costs, the combined real output of four major energy-intensive manufacturing groups fell by 33.6%. Between the first quarter of 2021 and the final quarter of 2024:

– Paper and paper-products output fell by 28.9%.

– Petrochemical output fell by 30.2%.

– Inorganic non-metallic products—including important mineral and construction materials—fell by 30.6%.

– Basic metals and castings fell by 46.5%.

By the end of 2024, the combined output of these energy-intensive industries was at its lowest point since the ONS series began in 1990. Other manufacturing declined by a much smaller 6.2%, while service-sector output increased by 16.4%, partly reflecting its recovery from the pandemic.

The ONS does not claim that energy prices explain every percentage point of this decline. Previous industrial downturns have occurred for other reasons. The timing, scale and concentration of the recent contraction are nevertheless impossible to ignore.

The Government now acknowledges the relationship itself. Its updated “British Industrial Competitiveness Scheme” (https://www.gov.uk/government/consultations/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach) states that higher electricity and energy costs are associated with lower investment, lower productivity, reduced employment and more firms leaving the market.

Department for Business and Trade analysis estimates that the approximately 50% increase in UK electricity prices between 2008 and 2020 may have reduced manufacturing investment by between 13% and 26%.

The industrial price disadvantage is not caused by one levy alone. Wholesale gas exposure, marginal pricing, network charges, carbon prices and environmental-policy costs all contribute. But the Government’s figures show that policy costs for very large UK industrial users were typically around £61 per megawatt-hour in 2024—approximately 27% of their total electricity bill. The equivalent figures cited for France and Germany were around £2 and £10 per megawatt-hour respectively.

The proposed Government remedy is to exempt qualifying manufacturers from the indirect costs of the Renewables Obligation, Feed-in Tariffs and Capacity Market. It expects this to reduce eligible firms’ electricity costs by £35–£40 per megawatt-hour.

The scheme is not due to begin until April 2027.

That is a revealing policy sequence. Costs were loaded onto industrial electricity, British producers became less competitive, output contracted, and the Government is now constructing selective exemptions to protect what remains.

Steel: when closure becomes an emissions saving

Steel exposes the difference between decarbonisation and deindustrialisation more clearly than almost any other industry.

Britain’s reported industrial emissions fell sharply in 2025. At first glance, that appears to be evidence of rapid environmental progress.

The Government’s own “provisional greenhouse-gas statistics” (https://www.gov.uk/government/statistics/provisional-uk-greenhouse-gas-emissions-statistics-2025/2025-uk-greenhouse-gas-emissions-provisional-figures-statistical-release) explain what happened. Industrial emissions fell by 12%, or approximately five million tonnes of carbon-dioxide equivalent. DESNZ says this was largely the result of blast-furnace closures in the iron and steel industry, together with lower gas consumption across industry.

This is not a minor technical point. The shutdown of productive assets was counted immediately as a reduction in Britain’s territorial emissions.

At Port Talbot, Tata Steel closed its final blast furnace at the end of September 2024, ending primary steelmaking at the site. The replacement 3.2-million-tonne electric-arc furnace is not expected to be commissioned until late 2027 or early 2028.

“Tata Steel has confirmed” (https://www.tatasteel.com/newsroom/press-releases/india/2025/tata-group-chairman-n-chandrasekaran-marks-groundbreaking-of-new-electric-arc-furnace-at-port-talbot/) that, during this intervening period, the business will import steel slab and hot-rolled coil to support its UK manufacturing and distribution operations.

The territorial emissions from Port Talbot fell first. The replacement production did not begin in Britain. Imported material filled the gap.

Electric-arc furnaces can provide major benefits. They can use Britain’s substantial scrap-steel resource, require less direct energy than traditional blast furnaces and produce steel with much lower on-site emissions. Properly implemented, they can form part of a credible modernisation programme.

But an electric-arc furnace is not automatically equivalent to retaining every capability associated with domestic primary steelmaking. The Government’s own “UK Steel Strategy” (https://www.gov.uk/government/publications/steel-strategy/the-uk-steel-strategy-web-version) acknowledges that certain steel grades require primary iron in addition to scrap. In the short term, it envisages meeting this need through imported pig iron or direct-reduced iron. Domestic direct-reduced-iron production remains a possible longer-term development rather than an established replacement.

Britain can therefore reduce its direct steelmaking emissions while importing more of the semi-finished steel and primary iron required by the remaining industry. Unless the full supply chain is measured, part of the carbon reduction exists because upstream production has moved beyond Britain’s border.

World Steel Association data show how severe the contraction has become. UK crude-steel output fell from approximately 5.6 million tonnes in 2023 to 4.0 million tonnes in 2024. Its current annual data record approximately 2.5 million tonnes for 2025. The Government now states that UK crude-steel production has declined by more than 50% over the past decade.

The strategic consequences finally became impossible to ignore at Scunthorpe. In April 2025, the Government intervened to prevent the immediate closure of British Steel’s remaining blast furnaces. On 16 July 2026, it “brought British Steel into public ownership” (https://www.gov.uk/government/news/government-brings-british-steel-into-public-ownership-to-protect-uk-steelmaking), explicitly citing national capability, supply chains, skilled employment, infrastructure and economic security.

British steel still supports around 33,000 direct jobs and another 36,000 jobs across its supply chains.

The same state that records a furnace closure as an emissions reduction is therefore spending public money and using emergency powers to prevent the country’s remaining capability from disappearing.

That contradiction lies at the heart of the Great Energy Displacement.

Chemicals and refining: from production sites to import terminals

The same pattern extends beyond steel.

Petrochemical output fell by 30.2% between early 2021 and the end of 2024. Paper, mineral products, basic metals and castings all experienced similarly severe contractions.

In January 2026, ExxonMobil’s Fife Ethylene Plant ended production after more than 40 years of operation. The facility had been capable of producing more than 800,000 tonnes of ethylene annually—an essential building block for plastics, medical products and wider chemical manufacturing. “ExxonMobil now records the site as having ended production” (https://www.exxonmobil.co.uk/).

At Grangemouth, INEOS announced the closure of the UK’s last synthetic-ethanol plant. The company attributed the decision to high energy prices and carbon costs. Because that causal explanation comes from the owner, it should be identified as the company’s assessment rather than treated as independent proof. The closure itself, however, and the loss of the UK’s last plant of its kind are not in dispute. “INEOS’s announcement is available here” (https://www.ineos.com/sites/grangemouth/news/chemicals-coming-to-an-end-in-the-uk/).

Refining tells an even more literal story.

In April 2025, Scotland’s only oil refinery at Grangemouth ceased refining and became an import and distribution terminal. The “operator confirms” (https://www.petroineos.com/refining/grangemouth/) that fuels previously refined on the site are now supplied through the terminal.

Prax Lindsey refinery ceased production in July 2025 following insolvency. The Government’s February 2026 call for evidence identified only four remaining major UK refineries.

There are many commercial and site-specific reasons behind these decisions. Demand patterns change, facilities age, international competition intensifies and companies fail.

But the physical outcome is unmistakable: sites that once made essential products are being replaced by infrastructure that lands, stores and distributes products manufactured somewhere else.

Imports can maintain supply. They do not maintain the same industrial skills, productive capability, tax base, regional employment or resilience.

Nor do they eliminate the emissions from making the product.

The emissions did not disappear

Britain’s main climate targets are measured using territorial emissions—emissions physically released within the UK’s borders.

This is a legitimate and internationally recognised accounting method. It is also incomplete when used to describe the climate impact of a consumption economy heavily dependent on imports.

The latest “Defra carbon-footprint statistics” (https://www.gov.uk/government/statistics/uks-carbon-footprint/carbon-footprint-for-the-uk-and-england-to-2023) show that Britain’s total consumption-based greenhouse-gas footprint was approximately 699 million tonnes of carbon-dioxide equivalent in 2023.

The comparable territorial figure was 384 million tonnes.

The 699-million-tonne consumption footprint comprised:

– 371 million tonnes embedded in imported goods and services;

– 206 million tonnes associated with goods and services produced and consumed within the UK; and

– 122 million tonnes emitted directly by households through heating and personal transport.

Imported emissions therefore represented 53% of Britain’s total consumption footprint.

Since 1996, emissions from goods and services produced and consumed within Britain have fallen by 49%. Emissions embedded in imports have risen by 43%.

Over the same period, Britain’s territorial emissions fell by approximately 50%, but its total consumption footprint fell by only 15%.

China alone accounted for 93 million tonnes of Britain’s imported emissions in 2023—25% of all emissions embedded in imports and 13% of the country’s total consumption footprint.

These consumption figures are modelled estimates and are revised as data and methodologies improve. They are less direct than measurements from the territorial inventory. Nevertheless, Defra and the ONS publish them because territorial accounting cannot capture the overseas emissions generated by British consumption.

The “ONS now states explicitly” (https://www.ons.gov.uk/economy/environmentalaccounts/methodologies/measuringukgreenhousegasemissions) that the larger reduction in territorial emissions may partly reflect Britain’s movement from a manufacturing economy towards a service economy with greater dependence on imports and their embedded emissions.

That is no longer a campaigning allegation. It is the official statistical explanation.

The Government’s forthcoming Carbon Border Adjustment Mechanism provides further recognition of the problem. From 1 January 2027, the mechanism will apply a carbon price to specified imports of aluminium, cement, fertiliser, hydrogen, iron and steel.

The Government says the purpose is to ensure that UK decarbonisation produces a real reduction in global emissions rather than simply displacing emissions overseas. The “official CBAM factsheet” (https://www.gov.uk/government/publications/factsheet-carbon-border-adjustment-mechanism-cbam/factsheet-carbon-border-adjustment-mechanism) identifies these industries as being at risk of carbon leakage.

CBAM may reduce some future competitive distortions. It does not prove that every past closure resulted from carbon leakage, and it will initially cover only selected products. Nor can a border mechanism by itself recreate closed plants, recover lost investment or rebuild specialist workforces.

It does, however, confirm the principle at the centre of this article: closing production in Britain while importing carbon-intensive substitutes is not necessarily global decarbonisation.

Four outcomes that must no longer be confused

Part Two distinguished nameplate capacity from actual and dependable output. Part Three requires the same clarity about declining energy demand.

Four different outcomes must be reported separately:

– Energy efficiency: Britain produces the same or greater industrial output using less energy.

– Industrial decarbonisation: Britain maintains productive output but reduces its full supply-chain emissions through cleaner power, technology and processes.

– Demand destruction: British industrial output falls because production becomes uneconomic, plants close or investment is cancelled.

– Carbon displacement: Britain continues consuming the product, but production and its associated emissions move overseas.

All four can reduce industrial electricity consumption or territorial emissions. Only the first two represent an unambiguous improvement in Britain’s productive and environmental performance.

Within a territorial carbon budget, a tonne of emissions removed because a factory became cleaner and a tonne removed because the factory closed both appear as reductions. Economically and globally, they are not the same.

This is why energy, industrial and emissions statistics must be reconciled. Lower energy demand cannot automatically be celebrated without asking what happened to output. Lower territorial emissions cannot automatically be presented as a complete climate success without examining imports and consumption emissions.

What genuine industrial decarbonisation would look like

A serious industrial strategy would aim to reduce emissions while maintaining or expanding Britain’s ability to make essential goods.

That requires an energy-first approach.

Manufacturers need reliable electricity and fuel at prices that allow them to compete internationally. Installing more generation capacity does not solve the problem unless the combined cost of generation, networks, balancing, backup, policy obligations and firm supply produces a competitive price at the factory gate.

Industrial electrification will not occur at the required scale if electricity remains considerably more expensive than it is in competing economies.

The transition must also be sequenced properly. Replacement capability should be operational and proven before strategically important existing production is removed. Port Talbot demonstrates the consequences of closing primary production several years before its replacement furnace is commissioned.

Britain should measure industrial policy using more than territorial carbon:

– industrial output and productive capacity;

– investment and employment;

– energy use per unit of output;

– import dependency and supply-chain resilience;

– territorial emissions;

– emissions embedded in imports; and

– the full consumption-based carbon footprint.

Domestic production should not be assumed to be environmentally worse simply because its emissions are visible in British accounts. A modern British plant operating under high environmental standards and supplied by increasingly low-carbon firm power may produce a lower global footprint than an imported product manufactured using coal-intensive energy and transported across the world.

If the objective is to reduce global emissions, the test should be whether Britain can make products more cleanly—not whether Britain can stop making them and remove the emissions from its own ledger.

Conclusion: the demand illusion

Britain’s territorial emissions have genuinely fallen. Its total consumption footprint has also declined, and real improvements in efficiency and cleaner electricity have contributed to that result.

But the two measures have not fallen at anything like the same rate.

Since 1996, territorial emissions have fallen by approximately 50%, while the consumption footprint has fallen by only 15%. Imported emissions have risen, domestic industrial energy use has collapsed and energy-intensive manufacturing output has reached historically low levels.

In 2025, one of Britain’s largest reported emissions reductions occurred because blast furnaces closed.

That is not the same thing as producing the same steel through an operating, competitive, low-carbon British process.

Part Two exposed the capacity illusion: the assumption that every announced or installed gigawatt represents dependable electricity.

Part Three exposes the demand illusion: the assumption that Britain needs less industrial energy because it has successfully transformed industry, when part of the explanation is that furnaces, refineries, chemical plants and production lines have disappeared.

Britain has not eliminated its need for their products. It has increasingly transferred production, employment, strategic capability and emissions elsewhere.

Efficiency is progress.

Cleaner domestic production is progress.

Closure followed by imports is displacement.

Until those outcomes are counted separately, Britain will continue making its emissions ledger look cleaner faster than it cleans the economy that its people actually consume.

Principal sources

1. “DESNZ, Digest of UK Energy Statistics 2026: Electricity” (https://assets.publishing.service.gov.uk/media/6a6a35c50ddb7e4831c629ed/DUKES_2026_Chapter_5.pdf)

2. “DESNZ, Energy Consumption in the UK 2025” (https://www.gov.uk/government/statistics/energy-consumption-in-the-uk-2025/energy-consumption-in-the-uk-ecuk-2025)

3. “ONS, The impact of higher energy costs on UK businesses” (https://www.ons.gov.uk/economy/economicoutputandproductivity/output/articles/theimpactofhigherenergycostsonukbusinesses/2021to2024)

4. “Defra, United Kingdom Food Security Digest 2025” (https://www.gov.uk/government/statistics/united-kingdom-food-security-digest-2025/united-kingdom-food-security-digest-2025)

5. “Department for Business and Trade, British Industrial Competitiveness Scheme” (https://www.gov.uk/government/consultations/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach/british-industrial-competitiveness-scheme-consultation-on-scheme-eligibility-and-approach)

6. “DESNZ, 2025 UK greenhouse-gas emissions: provisional figures” (https://www.gov.uk/government/statistics/provisional-uk-greenhouse-gas-emissions-statistics-2025/2025-uk-greenhouse-gas-emissions-provisional-figures-statistical-release)

7. “World Steel Association, annual crude-steel production data” (https://worldsteel.org/data/annual-production-steel-data/)

8. “Tata Steel, Port Talbot electric-arc furnace and transitional imports” (https://www.tatasteel.com/newsroom/press-releases/india/2025/tata-group-chairman-n-chandrasekaran-marks-groundbreaking-of-new-electric-arc-furnace-at-port-talbot/)

9. “UK Government, UK Steel Strategy” (https://www.gov.uk/government/publications/steel-strategy/the-uk-steel-strategy-web-version)

10. “UK Government, British Steel brought into public ownership” (https://www.gov.uk/government/news/government-brings-british-steel-into-public-ownership-to-protect-uk-steelmaking)

11. “Defra, UK carbon footprint to 2023” (https://www.gov.uk/government/statistics/uks-carbon-footprint/carbon-footprint-for-the-uk-and-england-to-2023)

12. “ONS, Measuring UK greenhouse-gas emissions” (https://www.ons.gov.uk/economy/environmentalaccounts/methodologies/measuringukgreenhousegasemissions)

13. “UK Government, Carbon Border Adjustment Mechanism factsheet” (https://www.gov.uk/government/publications/factsheet-carbon-border-adjustment-mechanism-cbam/factsheet-carbon-border-adjustment-mechanism)