Manufacturers react to the British energy security strategy 2022

Posted on 8 Apr 2022 by Lanna Deamer

The ‘British energy security strategy’ builds on the Prime Minister’s ‘Ten point plan for a green industrial revolution’, and the ‘Net zero strategy’. This plan comes in light of rising global energy prices, provoked by surging demand after the pandemic as well as Russia’s invasion of Ukraine.

The strategy, which aims to boost UK energy independence and tackle rising prices, also includes plans to increase wind, hydrogen and solar production. But experts have called for a bigger focus on energy efficiency and improving home insulation. Consumers are facing rising energy bills after the Russian invasion of Ukraine which has pushed gas prices even higher.

Under the government’s new plans, up to 95% of the UK’s electricity could come from low-carbon sources by 2030.

Manufacturers react to the British energy security strategy:

Stephen Phipson, CEO of Make UK, the manufacturers’ organisation said: “The energy security strategy is the bold, ambitious plan that we need to thwart our dependency on volatile oil and gas prices while firmly marching towards net zero. Exploiting domestic resources is a short-term necessary evil, but undoubtedly the acceleration of the introduction of clean energy is the right way to go.

“However, these projects cannot be delivered quickly and at a time of spiralling energy costs and a myriad of other financial burdens on business, industry desperately needs urgent action on the part of Government to reduce energy prices in the short term.

“Make UK has already called for a reduction in the carbon price via the cost control mechanism within the UK ETS, the removal of the additional Carbon Price Support tax that only UK customers pay and that Government consider removing the Climate Change Levy – all of which would drive down energy costs now.

“While the energy Intensive Industries energy compensation scheme is welcome, it still falls short of helping the bulk of the sector. Additionally, smaller companies are desperate to implement low carbon measures but have their hands tied by the current costs. The manufacturing industry has a key role to play in this transition and is ready to go. But it will need support to unlock its full potential and clear all the barriers to allow it to invest in switching to clean energy sources.”

Anthony Ainsworth, COO at npower Business Solutions, said: “Clearly, any increase in homegrown power from low-carbon sources is a welcome move to help the UK become more energy independent, less carbon intensive and more resilient in the medium to long term.

“However, for businesses – who are struggling right now with short-term liquidity issues and high bills caused by the volatile wholesale market – today’s Energy Security Strategy feels like a missed opportunity.

“For example, helping businesses reduce energy consumption through more innovative efficiency solutions is a real ‘no regrets’ action that could be taken. These can be implemented quickly and would result in immediate savings both in terms of their bottom line and decarbonisation efforts.

“Similarly, incentivising businesses to become more self-sufficient through renewable on-site generation is a win-win solution. It would protect businesses from market volatility as well as helping them decarbonise. In addition, businesses with on-site assets can provide a much needed source of power during times of high demand.

“Overall, unfortunately, today’s announcement does little to help businesses address the short-term issues they are facing right now.”

Katherine Bennett, HVMC CEO, said: “The government’s plan to refresh the UK’s energy strategy is to be applauded. It is right that policymakers and industry have made a strong commitment to energy independence in light of tragic events in Ukraine.

“Securing our energy supply while driving down carbon emissions is one of the great challenges of our time. We need to make progress on the transition to low carbon power generation now. We need energy from sources that are both environmentally and economically sustainable. We need bold, innovative manufacturing solutions.

“The High Value Manufacturing Catapult and our centres, including the Nuclear AMRC, stand ready to contribute. Public investment in nuclear power, as well as hydrogen fuel and renewables such as offshore wind, will be key to the journey to net-zero and will encourage the industrial confidence to deliver.”

Johnathan Dudley, Partner and Head of Manufacturing at Crowe, commented: “Soaring energy costs are a huge challenge to the manufacturing industry. This is not just a short-term cashflow issue, it is about the competitiveness and survival of UK manufacturing. There is a very real risk that factories will have to close as they become unviable with too-high energy prices.

“Yet, it seems manufacturing has been forgotten in this strategy. Firms are given no support with immediate costs and no incentives to invest for the long-term. As Governments in other countries have been stepping in with support packages worth billions to support businesses through the energy crisis, we risk destroying our manufacturing base and seeing it go abroad.

“We need a balanced and affordable approach from Government that supports UK industry in the short term and incentivises investment for the future. This means grant funding as well as loans and it means listening to industry much more to inform policy-making.

“Finally, it’s no good is being ‘clean’, while still importing products from countries that aren’t. This is just creating poverty at home whilst moving the problem elsewhere. As well as prioritising homegrown power, we need to prioritise homegrown businesses and UK workers when it comes to manufacturing and building the energy infrastructure needed to deliver more domestic power.”

Simon Oscroft, Co-founder of green energy supplier, So Energy commented: “As a 100% renewable electricity supplier, So Energy welcomes any focus within the Government’s Energy Security Strategy in strengthening our domestic supply of green energy as a positive step forward.

“However, today’s strategy does nothing to help the millions of households plunged into fuel poverty on 1st April after the price cap increased by £700 a year. The Council Tax Rebate package announced by the Chancellor in February only covers a fifth of this bill increase and so more immediate support is needed. Neither does this new strategy offer any support to the energy suppliers left in the market, all of who have been and will continue to foot the bill for what are increasingly loss making tariffs between now and the next price cap review. Improving home energy efficiency is another cost effective way of bringing down energy usage, lower customer bills and gain greater energy independence, but there’s nothing to address this in today’s strategy either.

“The cost of living crisis and associated projections for October’s price cap increase have got significantly worse since the February package was announced. With nothing to address this in today’s strategy, we urge the Government to bring forward additional relief measures in the coming weeks.”