Whether we lag or lead, the UK must deliver certainty

On a day when the Government, and in particular the energy industry, was cast into uncertainty by the Cabinet and Ministerial reshuffle; the apt warning for clarity and consistency from MPs and business could not have been more clear. 

Charles Hendry has been the most knowledgeable and experienced Energy Minister for many years and his departure is a shock the industry could do without at a time when investor confidence is so critical. If the UK is to harden not weaken its position, as the Prime Minister suggested at the Clean Energy Ministerial in April, as “one of the best places for green investment” then it must continue to lead in this area and provide certainty for those willing to invest here.

This message could not have been clearer from those debating our low carbon policy and its ability to leverage investment at Policy Exchange’s event. Especially when it had the added context of following the Tweeting of Hendry’s departure and the uncomfortable pause before Number 10 confirmed his replacement as John Hayes MP.

Laura Sandys MP, a Conservative member of the Energy and Climate Change Select Committee, opened with a clear view on the importance of the green economy that it is “no sideshow” and that it was not for tomorrow but part of today. Crucially she highlighted three things that were needed for building a long term, successful green economy: smart customers, smart businesses and clarity from government.

It was acknowledged that customers can already be smart to an extent by looking for their cheapest options but it is industry and business that must learn how to engage and educate more widely if they are to drive the low carbon economy. But the message to Government was the most consistent throughout; it must be “clean, clear and straight” with the public. It should be honest that “energy prices will only go in one direction” and so it must aid the reduction of consumption.

Michael Liebriech, CEO of Bloomberg New Energy Finance said that global clean energy investment has risen from $54bn in 2004 to $280bn in 2011. The choice was clear for him, “Does the UK want to lag or lead – this is a man or mouse moment”. There is clearly investment ripe for the taking, but if our energy policy is not in keeping with the PM’s words back in April then we will almost certainly impede progress. On a global finance perspective, Michael was clear that what we need is to “straighten out, simplify and calm down the fluctuation of policy”.

This concern was echoed by Jeff Lockett, Global Asset Manager for Energy Businesses at Air Products, an American green-tech company. Comparing experiences in America with those in the UK, his warning was that we, “have to create a confidence amongst the investment community that you’ll do what you say you’ll do.”

Alan Whitehead MP, a Labour member of the Energy and Climate Change Select Committee, a prolific blogger of energy issues and a critic of the Government’s Energy Bill, added his surprise at Hendry’s departure. Reflecting on the various appointments’, said “today’s reshuffle announcement is exactly what we don’t need”. He attacked the main issue with the Bill as the significant over complication when what is needed is simplicity and added that the problem with the Electricity Market Reform (EMR) is that it doesn’t deliver the reform part.

What was absolutely clear from all the speakers and their responses to the questions that followed was that the UK must deliver certainty for its energy policy. This is something ENA has been calling for for a long time. Whatever happens with our generation mix in the UK, the level of engagement business can achieve or the support Government gives to low-carbon technologies, the networks will deliver that energy from its source to where the demand is. But what there should also be no mistake about, is that without a balanced energy portfolio, without investment in smarter networks and without investor confidence, the cost to the consumer will be far higher than anyone can prepare home owners and business for.


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