Funding the future needs an Action Plan
Today [Tuesday 26th September], Energy UK publishes Accelerating Action, the final report in its Clean Growth Gap series, which looks at how the UK can attract the investment needed to maintain its world-leading role in clean energy, and ensure a secure, homegrown energy supply in years to come.
Previous reports in the series, produced in partnership with Oxford Economics, have highlighted how, after leading the way by making the most of its existing strengths and natural advantages, the growing global competition for clean investment has increased the risk of the UK falling behind with its own energy transition.
The series has also shown that pushing ahead with Net Zero will maximise the benefits the UK can expect in terms of investment, productivity and job growth and illustrated how every region of the UK will benefit from the transition, could prosper by building on existing strengths in industry and manufacturing, as well as leveraging geographic advantages.
To conclude the series, Accelerating Action looks at different measures the UK can take to ensure it doesn’t lose out to other countries on the economic opportunities available – which is timely after recent events like the Prime Minister’s speech on Net Zero and the last Contracts for Difference (CfD) auction results have raised further concerns about the current environment for investment in the UK.
With an estimated 70% of the funding required for the Net Zero transformation likely to come from the private sector, the report highlights seven actions the UK should take to attract this investment. As previous reports have shown: the quicker the transition, the more will come from the private sector leaving more public funding available for other priorities.
- Change investment incentives in the tax system so they match the specific characteristics and requirements of low-carbon projects.
- Amend the current Electricity Generation Levy to address the disadvantage clean energy projects receive in comparison to oil and gas and the barrier it provides to new projects.
- Ensure the CfD scheme reflects economic realities to avoid any repeat of the last auction round (see above).
- Understand the importance of a stable and predictable environment for investors and how proposed reforms, indecision and ill-advised rhetoric can adversely affect this.
- Tackle delays caused to the rollout of necessary infrastructure and new projects caused by restrictive and outdated planning guidance.
- Speed up the grid connections process so that new projects can come online quicker.
- As a stable and predictable carbon price is a vital incentive to invest in clean energy, link the UK Emissions Trading Scheme (ETS) with the EU ETS and take other measures to address recent volatility.
Emma Pinchbeck, Energy UK’s Chief Executive said:
“Much of the focus in the past week has been on how the cost of Net Zero and the energy transition might affect individuals and households, but in reality, most of the investment needed will come from the private sector with the benefits flowing straight to people across the UK.
“That’s why this series of reports has focussed on how we can create an environment that builds on our country’s strengths and maximises its attractiveness to investors in a world where there is intensifying competition for this funding. It’s also shown why an ambitious approach to Net Zero will maximise the benefits to the whole country, including those areas most in need of the economic boost.
“Sadly the messaging from last week will have left many investors questioning whether the UK has either the commitment or the belief to deliver on this. We have a vital choice to make on our future here and – as these reports have shown – the right decision is to seize the opportunity and make it the focus of our efforts to deliver economic growth, high-quality jobs and greater prosperity over the coming years and decades.”