Outgoing Prime Minister Theresa May has confirmed the Government will adopt the Committee on Climate Change’s recommendations and legislate for the UK to reduce carbon emissions to net zero by 2050. As the first major economy to commit to such a target, major business groups and leaders have backed the law – which will see an amendment to the 2008 Climate Change Act – demonstrating a wider commitment across UK industry to reducing greenhouse emissions.
However, against an ongoing backdrop of political and economic upheaval, the key word for businesses is ‘certainty’ – something that major business groups such as the CBI and IoD have been desperate for as we wait to see who will succeed Theresa May in Number 10, and what this will mean for the resolution of Brexit.
One of the key questions is around cost. As has been widely reported, the report from the CCC set out several ambitious – but not unfeasible – ways to enable the UK to meet the net zero target. Many of these will include a number of large infrastructure projects, and, although there has been speculation as to how much investment will be needed to realise these ambitions, Chancellor Philip Hammond recently warned that it could cost around £1 trillion.
What does this mean for UK business energy users?
Many businesses are already committed to, and are working towards, a low carbon future. What is clear though, is that our energy system will drastically change if we are to meet the net zero target by 2050 – and an investment of billions will be required.
Although the £1 trillion figure has since been disputed – with the CCC originally estimating that the cost of meeting a net-zero target will be around 1-2% of GDP in 2050 – it is likely that such funding will come from direct taxation of energy, meaning business users will see an impact on their energy bills.
Many sectors will need to be electrified to reduce emissions, and this will require significant deployment of low carbon technologies. Arguably, the focus here should be on existing and proven technologies, rather than investing in too much innovation, as history has shown that projects of this size can often exceed original budgets.
Therefore, it is key that the legislation does not disadvantage UK business. As such, organisations should continue to look at ways they can reduce energy consumption and carbon emissions now.
For example, the deadline for submitting audits that identify energy saving measures under ESOS Phase 2 is now less than 6 months away – 5 December – and recent reports revealed that many businesses are not acting on their recommendations from Phase 1.
We identified over £14m savings for our clients in Phase 1 and we worked closely with them to implement all viable savings opportunities. So, we know it has a tangible impact on the bottom line, that can both contribute to reducing carbon emissions, and also reduce exposure to increased costs. ESOS Phase 2 gives us another chance to refresh any further opportunities that have arisen through technology and project advancements in the last 4 years. Find out how we can help you meet the ESOS deadline here.
So, whilst we await the detail of the proposed net zero legislation, businesses should be focusing on optimising their energy strategies, because the cost of decarbonisation will undoubtedly have an impact on their energy bills. From taking a more flexible approach to procurement, to boosting their energy efficiency, there are numerous ways businesses can take control of their energy strategies. We create bespoke services our clients, creating cost and efficiency benefits for through long-term partnerships that centre around our value proposition of Buy it well; Use it better; Make your own; Do it right.
It really does make business sense to get your energy strategy in order now, and our experts can help. Call us on 01772 689250 or email email@example.com now to see how we can create a bespoke solution for your business.
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