UK energy needs 'less politics, more policy'
Government must provide certainty to help investors boost growth and provide secure, low-carbon power
In a speech on Thursday, to business leaders in central London, Dr Neil Bentley, CBI Deputy Director-General, set out the business view on the UK energy policy debate.
Video: Watch Ed Davey on 'huge opportunity' of the Energy Bill >>
Read Neil Bentley's speech on energy policy >>
Speaking alongside Ed Davey MP, Secretary of State for the Department of Energy and Climate Change, Dr Bentley made clear that swift Government action is necessary to boost investor confidence in all energy technologies, if we are to tackle the UK’s energy challenges and reap the economic benefits.
Dr Neil Bentley, CBI Deputy Director-General, said:
“Energy investment is as much about growth as it is about secure, low-carbon power.
“Giving energy policy speeches can sometimes feel like being stuck in a time warp. While we support the Government’s direction of travel, the speed of progress is pretty frustrating.
“The Energy Bill is a once-in-a-generation opportunity, to boost our economy as well as head off our energy challenges. To grab that opportunity before it is too late, we need less politics, more policy.”
On the role of gas, Dr Bentley said:
“All the evidence points towards a balanced and diverse energy mix as the most cost effective pathway to decarbonisation. This includes new nuclear, new renewables, new carbon capture and storage and new gas.
“The Government is right to encourage safe shale gas extraction as it makes sense to maximise the amount of energy we can produce at home at a reasonable cost. But gas alone isn’t the answer.
“Most modelling shows future European gas prices rising, with or without an influx of unconventional gas, and so from both a cost and a security perspective, a mixed portfolio of generating technologies looks favourable.
“So let’s stop arguing over the energy mix and focus on attracting investment to create jobs and growth as quickly as possible.”
On energy investment and the urgent need to agree on a long-term stable policy framework in Europe and at home, he said:
“There is no business case for putting billions of pounds into these long-lived assets if investors cannot see a long-term, stable policy framework. Right now, the policy future looks too much like a blank canvas.
“We mustn’t forget that an effective framework begins at the European level. Far too little emphasis is being placed on securing the future of the EU Emissions Trading Scheme, and much of the policy complexity at home is being constructed to compensate for the lack of a European vision beyond 2020.
“The CBI has been saying for a long time that we need an EU emissions goal for 2030. Next month, we will publish our proposals for the future of the Emissions Trading Scheme, which will address the possibility of short-term changes and, crucially, how the system can be improved to better support energy-intensive industries.”
On the UK Energy Bill, he said:
“The case has been made for a more managed market – and the Government should be upfront and make clear that this is where we are heading.
“We appreciate the Government’s efforts to consult thoroughly and get those changes right. But we mustn’t fall victim to paralysis by analysis – the longer we go on without finalised policy, the longer investment stalls or goes abroad.”
He highlighted three business priorities for the UK Energy Bill:
- More clarity on the total amount of money available for incentive payments in the future, beyond the current 2015 horizon;
- Details on how the “capacity mechanism” intended to ensure security of supply will operate, to allow companies to decide what to do with existing plants;
- Ensuring the Bill works for the most at-risk energy-intensive businesses, by exempting them from the costs and incentivising Combined Heat and Power and Carbon Capture and Storage.
On the debate over whether to include carbon targets in the Energy Bill, he said:
“Let me be clear: the CBI strongly supports the Climate Change Act and the carbon budgets. The Energy Bill must deliver the pace of decarbonisation required to achieve them, which means that the levy control framework and the delivery plans must be set with them firmly in mind.
“This link to the existing Climate Change Act targets should be enshrined in the Energy Bill. But when we ask financiers what they need to help them make investment decisions, they don’t mention more targets. What they’re crying out for is the substantive policy detail I’ve set out.”
On the need for a unified political message to attract investment, even once the policy details are in place, he said:
“We are seeing UK energy policy get increasingly political. Are you for green or for growth? Are you for renewables or for gas? Fruitless debates over these false choices can seem like they’re just noising off, but they really matter.
“With every new story that adds to the sense of uncertainty, I hear of more phone calls from overseas head offices to UK executives asking whether it is worth putting further work into scoping out possible investments in the UK.”