Business and industry need more support to invest in the switch to cleaner energy and greater energy efficiency and take advantage of the benefits that could support their growth and competitiveness.

That is the conclusion of an Energy UK review into current policies intended to drive commercial and industrial decarbonisation. A host of business and energy trade associations have contributed to the review – including the CBI, BCC, UK Steel, British Glass, Make UK, Energy Intensive Users Group, The Food and Drink Federation, Chemical Industries Association and UK Hospitality.

Energy costs remain a major challenge for businesses, as illustrated by the Government being forced to spend £20 billion in 2022/23 to help shield them from record bills. The review notes how energy saving schemes have helped cut energy costs bills for SMEs by as much as 60% while investment in clean energy and flexibility assets means businesses can manage their energy costs better, making them more resilient to future price shocks and reducing the need for expensive interventions in future. With the forthcoming Spending Review taking place amidst likely restrictions on public spending, it underlines how supporting businesses to decarbonise their operations can be money well spent.

Another issue highlighted in the review is the need to tackle the cost of electricity, especially with it now being five times higher than gas – a clear disincentive for businesses looking to electrify their operations. Other challenges identified include the need for better advice and access to support for SMEs; addressing problems with connections and network charges; and potential tax reforms to incentivise investment in clean technologies. An increased role for carbon prices and border taxes also emphasises the need for businesses to decarbonise in order to remain competitive and avoid falling behind – as well as the imperative to link the UK and EU Emission Trading Systems (ETS) to stop businesses facing higher costs when exporting.

Energy UK’s chief executive, Dhara Vyas, said, “Businesses are the lifeblood of the economy and key to increasing the country’s growth and prosperity. Companies have always adapted to change and businesses know how they can benefit from investing in cleaner energy and green technologies. However, it has also been a challenging few years for many of them, not least from high energy prices, so they need support from Government and polices that incentivise companies to make these changes.

“Everybody is aware of the constraints on public spending but without supporting businesses through this challenge, they will remain vulnerable to future price shocks and other developments. The country can then end up paying in the long run by compensating businesses rather than enabling them to invest and future proof their operations. More efficient and competitive businesses also mean lower costs can be passed on to consumers, benefitting the whole economy. It is vital that the Spending Review supports the aims of the new Industrial Strategy in supporting businesses to bring growth and employment as well as remaining competitive.”

CBI’s Senior Manager, Jonathan Oxley, said, “Businesses across the UK economy play a key role in both driving growth and achieving net zero. Investing in the UK’s clean energy can not only help businesses to manage their energy costs more effectively but can also enhance energy security and resilience to future price shocks. However, unlocking these opportunities and growing new markets requires targeted policy support to assist businesses in their decarbonisation journey.”

Ben Fletcher, Chief Operating Officer at Make UK said, “The UK has two options, either action or inertia. To be able to compete in a global market, our industries need a long-term competitive electricity price. Without this, we are at risk of not only missing out on this industrial revolution, with the investment in UK businesses and careers that will go along with this, but also losing what we already have as the UK becomes less competitive and less attractive to investment.”

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