Request a callback

Carbon reduction mustn’t affect the competitiveness of UK businesses

19th January 2018

Commenting on the CCC’s independent review of the Clean Growth Strategy, David Oliver, a consultant at energy consultancy Inenco, said:

“As would be expected, the CCC’s assessment of the Clean Growth Strategy is highly focused on its potential to meet carbon emission reduction targets. It highlights that there are gaps of around 10-65 MtCO2e to meeting both the fourth and fifth carbon budgets on the basis of central projections, and also identifies gaps in the policies and proposals announced.

“We support some of the proposals to bridge the gaps, particularly those that are focused on energy efficiency for industrial processes and for buildings. As well as reducing carbon, increasing the energy efficiency of new and existing buildings will save businesses and consumers money on their energy bills, improves local air quality and will also free up much-needed local electrical capacity to encourage adoption of new electrically driven technologies such as electric vehicles. We agree that standards need to be developed to deliver higher levels of fabric efficiency and future-proof properties for low carbon heat. Heat is a major contributor to UK carbon emissions, and not enough has been achieved in this area so far.

“We also support the need for low-carbon electricity generation, and, again, not only because this reduces carbon. Fossil fuels are diminishing, and we need to find sustainable replacements.

“In addition, the industrial energy efficiency scheme, which is due to be consulted on this summer, needs to be accelerated, as without confirmed timescales and incentives, investors may delay projects until there is more certainty. In 2018 we will see the effective launch of ESOS Phase 2, and it would be a missed opportunity if those carrying out ESOS are not incentivised to convert, or work in parallel with, the recommendations from their audits at the earliest opportunity.

“The CCC’s focus on carbon capture and storage (CCS) is also a concern. The assessment says the Government should not plan to meet the 2050 target without CCS, and that a funding mechanism for industrial CCS should be set out this year.

“Carbon capture is very expensive, and it doesn’t improve security of supplies, free up electrical capacity or improve local air quality – and will increase taxes for energy users.

“The Government has already committed to a total carbon price at around today’s level of £24/tCO2 for the UK power sector regardless of whether the UK continues to participate in the EU ETS.

“In 2017/2018 alone, the Renewables Obligation (RO) Levy, the Feed-in-Tariff (FiT) Levy, the Contracts for Difference (CfD) Levy and the Climate Change Levy (CCL), coupled with carbon floor costs, will add around £41/MWh (4.1p/KWh) to an energy bill.

“We believe any further taxes will affect the global competitiveness of UK businesses, with those operating in other affluent countries not facing the same tax burdens, or indeed making the same commitments to carbon reduction.

“We should of course all be working towards reducing carbon emissions and meeting the 2050 target, but value for money, and general resource efficiencies, need to be part of the equation. For example, it is worth considering whether the same carbon savings from carbon capture schemes could be achieved at a lower cost, and with less impact on our electricity infrastructure, by investing time and money in supporting energy efficiency in developing countries or by lobbying richer countries to play their part.

“The CCC obviously has a climate change agenda, but there are other issues to consider alongside carbon emissions, including the impact on UK businesses.”