Manufacturers call on Government to deliver low-carbon Energy Statement

The UK Government must introduce reforms which increase the uptake of low-carbon technologies to restore the "tepid" confidence in Britain's future energy security, according to the manufacturers' organisation EEF.

In a report released today (12 December) examining the UK’s future electricity supply, the trade body urged ministers to re-instate an Annual Energy Statement as part of the Government’s new Industrial Strategy.

EEF’s research was supported by a survey which found that almost half of manufacturing companies now disagree that the Government has a suitable long-term strategy for security of supply.

The organisation’s head of climate & environment policy Claire Jakobsson said: “Manufacturers’ confidence in the Government’s management of security of supply is tepid at best. The last 18 months have been a high degree of uncertainty in the energy market as a result of numerous policy changes, the Brexit vote and two new administrations in a short period of time.”

Significant reform

EEF suggests that recent Government decisions on new nuclear and coal phase-out have begun to “steady the ship”, and the decision to combine the business and energy departments into the Department for Business, Energy and Industrial Strategy (BEIS) is an “ideal opportunity” to establish an Annual Energy Statement.

The previous Energy Statement, which existed under the coalition Government, was largely regarded as “inconsequential” by most stakeholders, EEF says, and a meaningful replacement could set out a “clear and stable” direction of travel for energy policy as part of an overarching industrial strategy.

A reformed statement should outline key policy measures which provide a clear trajectory for low-carbon energy policy, the EEF states. This would begin with immediate announcements on a full phase-out strategy for coal power by 2025, a plan for the uptake of carbon capture and storage (CCS) and details on for support for new low-carbon generation.

“Whilst there has been significant attention paid to how we supply our electricity there continues to be too little focus on how and when we use it,” Jakobsson added. “Taking action on this will save significant sums of money, both for the system as a whole and companies. The potential is there, but significant reform will be necessary if we are to realise it.”

Balanced generation

EEF’s report goes on to outline how the changing mix of electricity generation will fundamentally alter the way the UK balances supply and demand of electricity.

According to EEF research, less than 10% of business participate in some form of demand response activity altering consumption patterns to save money and earn revenue. The Government must improve the current policy framework to enable major consumers of electricity, including the manufacturing sector, to benefit from an efficient, flexible grid, EEF states.

The organisation believes the Government should implement a series of reforms to increase demand response and energy efficiency uptake. This includes the development of a fully-fledged electricity demand response scheme; the introduction of a new energy efficiency discount on the Climate Change Levy, and a reform of the capacity market to allow easier access for demand response assets in future auctions

Commenting on the report, Liam McDonagh, director of EEF partner CMR Consultancy, said: “The report highlights that optimising the supply of and demand for electricity should be a function of flexible and balanced electricity generation and storage, electricity efficiency and demand side management, bound together with an effective policy framework and appropriate incentives.”

George Ogleby

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