Why UK Energy Policy is Failing our Ceramics Industry

Energy has become the single biggest challenge facing the UK ceramics industry. Dramatic rises in costs in recent years, combined with uncompetitive policy decisions, are putting manufacturers at a serious disadvantage compared to overseas competitors and threatening the future of a sector that underpins much of UK manufacturing.

Ceramics businesses are resilient and innovative, but no industry can absorb sustained energy shocks of this scale without consequences. What was once a manageable cost has become an existential issue.

Competing globally with the highest energy prices

UK ceramics firms operate in a highly competitive global market, yet face some of the highest industrial energy prices in the world. Analysis shows that manufacturers in China and the United States pay roughly what UK businesses paid five years ago, while UK ceramics firms now pay around 50 per cent more than they did for the same energy use.

This creates a deeply uneven playing field. UK manufacturers are being asked to compete internationally while carrying a cost burden that many overseas rivals simply do not face.

The financial impact is severe and growing.

An energy intensive industry by necessity

This challenge is structural, not temporary. Ceramics is an energy intensive industry by necessity, not choice. Kilns operate continuously at extremely high temperatures, often around the clock, and energy demand cannot simply be switched off.

Ceramics UK members are committed to decarbonisation and are actively investing where possible, but there are no simple alternatives available today. Hydrogen is often cited as a future solution, but the infrastructure is not yet in place or hydrogen available at scale. Some manufacturers may be able to switch to electricity firing but face insurmountable costs of new equipment and very high electricity bills. For now, natural gas remains essential, accounting for around 86 per cent of the sector’s total energy use.

Policy blind spots and a missed Autumn Statement

Despite this reality, recent Government policy has failed to recognise how the UK ceramics industry actually consumes energy. The recent Autumn Statement was a particular disappointment, containing no reference to energy support for manufacturers at a time when costs remain a critical issue for the sector.

This silence has been keenly felt across the industry, especially as other sectors continue to receive targeted support.

Last year, Government announced an expansion of the British Industry Supercharger Scheme. Around 500 of the UK’s most energy-intensive businesses are set to save up to £420 million a year on electricity bills from next April.

However, only around 10 per cent of UK ceramics manufacturers qualify for the increased relief, meaning not only that up to 90 per cent of the sector will miss out entirely, but that same 90 per cent will bear the cost of helping other industries.

Ceramics UK Chief Executive Rob Flello, “We’re urging Government to extend the Supercharger Scheme to ensure a fairer deal on high energy costs for our industry, which has been getting short shrift to date,” he said. “While businesses in sectors such as steel, cement, glass and chemicals will receive up to 90 per cent compensation for electricity network charges, the majority of ceramics manufacturers remain excluded and continue to face the highest industrial electricity prices in the G7 and globally.”

Strategic importance overlooked

The situation is particularly frustrating given the strategic importance of ceramics. The sector enables the production of steel, glass and other high-temperature products and supports industries that will benefit directly from the Supercharger Scheme.

Ceramics are also critical to aerospace, defence, IT, national security, and housebuilding, yet remain overlooked when energy support is allocated.

Electricity focus ignores the gas reality

Compounding the problem is the risk that government may shift levies from electricity onto gas bills. While removing levies from electricity is welcome in principle, Ceramics UK has warned that these costs must not be shifted onto gas.

For ceramics, this would be devastating.

“Energy intensive does not just mean electro-intensive,” said Rob Flello. “Natural gas dominates our energy use, yet there is no relief for gas costs at all. Government still does not seem to understand the fundamentals of how our industry operates.”

A vital industry under growing pressure

The UK ceramics industry contributes more than £1.5 billion a year to the economy, generates £600 million in exports and employs over 20,000 people across more than 150 sites. It is a world leader, combining advanced recognised heritage brands.

But heritage alone will not protect the sector from sustained cost disadvantage. Members report energy costs quadrupling over the past two years compared to overseas competitors. Without action, the risk to investment, capacity and jobs is real.

What Ceramics UK is calling for

Ceramics UK is calling on Government to act to extend the Supercharger Scheme to ceramics, deliver a genuine level playing field on electricity prices, and ensure levies removed from electricity are not transferred onto gas.

This is a pivotal moment for the sector. We urge members and stakeholders to engage with Ceramics UK, share evidence of the impact of energy costs, and help us make the case for the support our industry urgently needs.