What are the key points of the new energy strategy for manufacturers?
🏭 Nuclear - Plans to reduce the UK’s reliance on oil and gas by building as many as eight new nuclear reactors, including two at Sizewell in Suffolk. A new body will oversee the delivery of the new plants.
💨 Wind - Reform planning laws to speed up approvals for new offshore wind farms. For onshore wind farms, it wants to develop partnerships with “supportive communities” that want to host turbines in exchange for guaranteed cheaper energy bills.
💧 Hydrogen - Targets for hydrogen production are being doubled to help provide cleaner energy for industry as well as for power, transport and potentially heating.
☀ Solar - Consider reforming rules for installing solar panels on homes and commercial buildings to help increase the current solar capacity by up to five times by 2035.
🛢 Oil and gas - A new licensing round for North Sea projects is being launched in the summer on the basis that producing gas in the UK has a lower carbon footprint than doing so abroad.
🔥 Heat pumps - There will be a £30m “heat pump investment accelerator competition” to make British heat pumps, reducing demand for gas.
What does it mean for #ukmfg?
We understand that this strategy focuses on energy supply security, and these projects cannot be delivered quickly. 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 the Government to reduce energy prices in the short term.
To date the Government hasn’t made significant announcements that could help reduce energy prices for businesses.
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 invest in measures to reduce their carbon emissions and maximise their energy efficiency but have their hands tied by the current costs.
For example, the carbon price could be alleviated, at least temporarily, now that the net-zero direction is firmly set and businesses are wanting to reduce their energy consumption and maximise energy efficiencies, which will also lead to carbon emission reductions.
Make UK has welcomed the Chancellor’s proposal to work with industry on this until the Autumn Budget, but this conversation needs to take place now.
The changes proposed would help both energy-intensive industries and the others and include the activation of the cost control mechanism within the UK ETS, the removal of the additional Carbon Price Support tax that only UK customers pay and potentially temporarily reducing or removing the Climate Change Levy.