Energy Executives Stress Urgent Need for Investment Clarity from the Government
Image credit: RWE
At a 'productive' gathering, there were stern alerts about the potential of investing in green energy, whilst the government illustrated the 'immense possibilities' that lay ahead as it strives to meet its zero carbon objectives.
The government was eager to assure energy sector representatives yesterday that it still stands dedicated to the UK's path to net zero emissions, despite the recent proposal to reverse specific decarbonisation measures.
At a meeting with senior executives from some of the UK's biggest energy providers, Energy Security and Net Zero Secretary Grant Shapps sought to reassure the companies that the government is still dedicated to its commitments to tackling climate change, regardless of criticism of environmental initiatives.
After the gathering, Shapps expressed that the agreement among energy companies was unmistakable: "There are colossal possibilities in front of us, and these can just be taken advantage of if the UK government, industry and controllers team up over the division to quicken venture into renewables, bring down costs and accomplish net zero."
After the government endorsed fresh oil and gas licenses, its criticism of air quality regulations, its intentions to postpone waste packaging regulations and energy efficiency standards, and reports of a division in Cabinet over the proposed zero-emission vehicle mandate, the comments appear to indicate a change in attitude.
Energy representatives voiced their approval of the gathering. David Bunch, the country chair of Shell UK who was present, commented: "This get-together was effective. Shell UK has already expressed its major investment plans to help ensure the country's power supply and the shift to an environmentally-friendly energy system."
At the meeting, Ana Musat, executive director of policy at trade body RenewableUK, noted that the renewable energy sector was pleased to have the chance to meet with the Secretary of State to go over the potential opportunities and difficulties that the energy sector currently faces with regards to energy security, affordability, and decarbonization.
At the meeting, Shapps was warned that the UK's investment climate was deteriorating due to policy uncertainty, inflation, and intense competition from the US and EU. These countries are making more significant efforts to attract clean energy developers.
At the gathering, a participant informed the Guardian that Grant Shapps had been made aware that because of the country's challenging economic situation and unpredictable political landscape, investor enthusiasm in the UK had declined from previous levels.
The speaker noted that the investors were greatly concerned about the situation, expressing their worries. Thankfully, the authorities have taken notice of these apprehensions, and this will likely be the start of a discussion about what should be done next.
Stressing the point, Bunch noted that Shell's intended spending in Britain is "deeply reliant on fiscal solidity, understanding of business designs and safeguarding of shareholders' worth".
Musat sounded the alarm about accommodating the investment atmosphere for those who develop clean energy. She noted, "It was plain to see that there is a pressing need to improve the UK's investment environment because of our current difficult economic situation and the intense rivalry for supplies, talents, and investment from other countries. What's more, we all understand that giving priority to the deployment of inexpensive, locally-produced renewable energy initiatives is paramount for ensuring Britain's energy security."
The speaker emphasised the need for government action to reduce planning complications, promote the clean energy sector, and promote offshore wind initiatives. Recently, Vattenfall put their 4GW offshore wind farm project on hold as a result of cost concerns, which caused some to worry that if the government doesn't revise existing clean energy contracts to account for the increased material costs that developers have been facing, the industry's progress might be hindered.
Musat noted that wind and solar are the cheapest new energy sources, and the government should ensure the Contracts for Difference framework considers the economic challenges the sector faces to boost investor confidence. They emphasised the need for a steady stream of renewable energy projects to exploit the UK's competitive advantages in afloat wind, cables, and blades. This could generate high-quality, well-paid jobs, especially in coastal areas outside London and the South East, with offshore wind alone projected to employ over 100,000 people by 2030.
Ruth Herbert, head of the Carbon Capture and Storage Association, approved the government's decision to back two more carbon capture initiatives, increasing the total number of projects to four. However, she also left the meeting cautioning that there is still a need for clarity on the timeline for the policy and financial aid for the new industry and the completion of the first projects.
This morning, the government attempted to tackle one of the renewable energy sector's worries by boosting the budget for the next contract for different clean power sales by 10 per cent to £227m. It is not yet known if the extra money will be enough to obtain the predicted levels of fresh capacity from offshore wind developers, who are becoming increasingly concerned about the increasing price of labour and materials.
Yesterday, Shapps attempted to defend the government's intention to utilize North Sea oil and gas reserves to their fullest extent, claiming that not issuing new licenses would be illogical.
He informed Sky News that if we become dependent on foreign nations, it would lead to a decrease in the 200,000 jobs in the oil and gas sector, a loss of revenue from oil and gas companies, and a fourfold increase in CO2 entering our country - all of which would be disastrous.
It would not make sense to deny granting oil and gas licences. We are taking this approach because it will increase our energy security and British energy production, and, in addition, it will help to reduce carbon emissions.
Experts have disputed the evaluation of Shapps, noting that most of the gas coming to the UK is from Norway, which has a smaller carbon footprint than gas from the North Sea. Moreover, they have cautioned that making more oil and gas available will not help in achieving the aim of keeping temperature increases at 1.5C.