Queen’s Speech: Business reacts with call for clarity

Businesses have welcomed the inclusion of Electricity Market Reform (EMR), the introduction of the Green Investment Bank (GIB) and a draft Water Bill in today's Queen's Speech - but said that clarity is needed on policy framework and clear leadership on the green economy.

The speech, which introduced 19 new legislations, kicked off by stating that Government would focus on economic growth, justice and constitutional reform as it aims to boost the UK economy.

It pledged to do this by reducing the burden on businesses, promoting enterprise and ensuring fair investment.

Electricity Market Reform (EMR)

Businesses and organisations have by and large welcomed the inclusion of the EMR in the Queen’s Speech, which will see the long-awaited Energy Bill brought before parliament during the 2012-13 session.

National Grid said it believes the EMR announcement in the speech represents an “important step” in helping the UK move towards a secure and affordable, low carbon electricity future.

Designed to reform the UK electricity market in a bid to facilitate large-scale investment in low carbon generation, the bills includes proposals to introduce a Capacity Mechanism and Feed-In Tariffs (FITs) with Contracts for Difference were mooted.

National Grid executive director Nick Winser, said: “The generation mix is changing and we need to encourage effective investment in the energy industry to keep costs down for consumers.”

Renewable Energy Association (REA) chief executive Gaynor Hartnell, said: “We look forward to seeing the details of the Energy Bill. This is of immense importance to project developers in renewables, as the measures it puts in place will eventually replace the Renewables Obligation. Many of the projects in development now are working to a timescale that takes them into the new regime, and they need to know the detail as soon as possible.

“The new arrangements aim to deliver a stable price for renewable electricity generators, irrespective of what happens to electricity prices. If all works as intended, it should make project development less risky and means that the public pays no more than it needs to for green power.”

However, the REA added that it is also waiting for clarity on the Renewables Obligation (RO) subsidy levels coming into effect from April next year under the current policy.

Grant Thornton head of energy, environment & sustainability, government & infrastructure advisory, Nathan Goode said the key question is on timing – when will these measures become law.

He said: “This will obviously be a combination of how quickly legislation is passed and EU State Aid approval, which is not under the UK Government’s control.”

He added: “I guess the other thing is that the rumour of delay to EMR is apparently unfounded – but they still have a big challenge ahead of them to make EMR workable.”

CBI director-general John Cridland added: “Let’s be clear, electricity market reform is about keeping the lights on. Business investment in low-carbon will only happen when the detailed market framework is in place. Today’s announcements are an important stepping stone.”

Green Investment Bank (GIB)

The Climate Group hailed plans to establish the GIB as an important, though “belated” step towards steering Britain to a low carbon future.

Climate Group chief executive Mark Kenber, however said that investment measures should be clearly understood and called on the Government to clarify its plans to fund these measures.

He said: “This is a positive step after two years of lack of direction on the environment and the low carbon economy – but we need more details on the government’s funding commitments.

“The world’s low-carbon energy market is expected to triple to almost £1.4 trillion by 2020. There is a window of opportunity here and now for Britain. We cannot afford any more delays in kick-starting the much-vaunted green investment programme without running the danger of leaving the UK lagging further behind in the global market place.

“The Government needs to provide clear leadership on the low carbon economy. This is the only way to attract investment, spur economic growth, create more jobs and lower energy bills.”

Greenpeace senior energy campaigner Louise Hutchins heralded the GIB as a “key vehicle” in helping to drive green economic growth and tackle climate change, but warned it “will struggle to do these important things if the Bank is little more than a poorly funded quango”.

She added: “It’s got to have the borrowing powers that will see it succeed, and that will bring success to the British renewable energy industry.”

Draft Water Bill

A draft Water Bill which aims to improve competitiveness and efficiency of the industry in England and Wales was also promised, however there has been some disappointment that the Bill was only announced in draft form given the “urgency of the situation”.

Institution of Civil Engineers (ICE) director general Nick Baveystock, for example said: “We urgently need to address the growing gap between our water supply and demand, as highlighted by the current droughts, and it cannot be done without firm action and commitment from Government.

“Every day that goes by without the implementation of changes already outlined and consulted on in the white paper last year, we get further and further away from a resolution to our current and future water problems.”

The Green Party said it welcomed the mention of a draft Water Bill but called for more powers to hold water companies to account, adding that proposals to reform the water market are “full of holes”.

Green Party leader Caroline Lucas, said: “Consumers are being warned that they must do all they can to save water, yet ministers are failing to extend the same level of obligation to the water companies over their scandalous leakages.”

As a result, she called for Ofwat’s power to be “strengthened” to ensure that water companies are forced to use their profits to make “substantial” improvements to the pipelines and reduce the “huge water wastage that is leaving us in short supply”.

And what was not mentioned…

Climate Change

However, the Green Party has slammed the “deafening silence” on climate change as an “absence of leadership”, with party leader and MP Caroline Lucas saying the Government has “squandered a vital opportunity to tackle climate change and the growing environmental crisis at the top of its legislative agenda”.

Ms Lucas said: “The deafening silence from this Government is unforgiveable. Not only is this a tragedy for the environment, it’s also a tragic missed opportunity for our stagnating economy – and the hundreds of thousands of jobs in new green industries which would be created if ministers got their priorities right.”

She added that climate change is also impacting on water supplies and called for the Government to put a strategy in place that ensures a consistent supply – or face water shortages becoming the “norm”.

“Instead of strong leadership on the green economy, all that seems to be on offer today is a Green Investment Bank that still can’t borrow, and a deeply flawed Electricity Market Reform Bill which, without radical amendment, risks locking us into a high carbon, high cost, and gas dependent future”, concluded Ms Lucas.

Carys Matthews

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