WITH the future of our energy policy up in the air right now, it seems investors need a crystal ball to predict how energy markets may look in 20 or even 10 years’ time. It doesn’t do much for confidence in the UK’s ability to replace and upgrade its ageing energy infrastructure.
Last year, the Government announced that the UK electricity market needed £110bn by 2020 to keep the lights on and reduce our carbon emissions.
The CBI’s Colour of Growth report showed that tackling our energy and climate change challenges could add £20bn to UK GDP by 2015.
But if those investments and long-term growth opportunities are to become a reality, we need to urgently hammer out the detail.
So what’s required to deliver this? First, get the Energy Bill, which is receiving its third reading in the House of Commons this week, on the statute book this year – a once-in-a-generation opportunity to boost our economy with a secure, affordable and low-carbon energy supply.
The Bill must have the clout to nurture a growing mix of low-carbon electricity generation – including nuclear, renewables, coal and gas with CCS. And it needs delivering this year; we’ve been waiting a long time.
We can’t rely on any one fuel or technology and all options need to be on the table in the future. But instead of infrastructure getting built to support them in the years ahead, we often see projects held up due to uncertainty among investors.
Getting the Bill on the books will go a long way to unlocking the investment we need in our energy infrastructure.
Second, we need a level playing field in Europe and the EU must continue to demonstrate leadership and ensure its landmark Emissions Trading System remains a credible scheme in the years to come.
This means reaching an agreement on an EU-wide emissions reduction target to 2030, which would give businesses the confidence to make long-term investment decisions.
Finally, we must have a system that works for all businesses, which protects the most-at-risk firms from rising costs. Energy-intensive industries like the chemicals sector on Teesside and others around the North East must play a central role in our future low-carbon economy. We cannot afford, environmentally or economically, to drive these jobs overseas.
The UK is competing on an international stage and the more reports we see of politicking taking preference over policy-making, the more we will see investors hesitate and cast their eyes elsewhere in the world for the next opportunity.
Predicting the future has had a somewhat chequered history over the centuries. Rather than asking the near impossible of global investors, better that the Government puts an effective policy framework in place urgently and send a clear message that the UK is open for business.
:: Andrew Hebden is assistant director of CBI North East