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Steel and Planes - Should the UK government subsidise the transition to green energy?

Geoff Riley

8th November 2022

I'll be moving onto government intervention soon in my Year 12 microeconomics. So these two stories on lobbying for government subsidy caught my eye as potential mini case studies for student investigation.

The FT reports here that the UK aviation sector is lobbying the government to provide more financial support to speed up and increase the commercial viability of green fuels produced by household waste such as cooking oil.

According to the article, ""UK green fuel production has the chance to become a domestic success story, but the government needs to act now to ensure manufacturers get the price certainty needed to unlock private investment into this sector."

Would the case for financial support now be stronger if the aviation sector themselves had paid more of the external costs created by the industry in years gone by?

The second FT article concerns the steel sector. Read: UK steel industry warns it needs state aid to survive green transition

Tata Steel has warned that "without taxpayer help they could be forced to close their operations, leaving the UK as the only large economy without primary, or virgin, steel production.....Analysts have estimated that it would cost about £2bn to decarbonise the Port Talbot steel plant alone."

Thousands of well-paid jobs are at stake apparently - the steel industry of course has veered from one crisis to another in recent years.

Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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