The UK is at risk of jeopardising its energy security by failing to deliver a clear policy framework for low-carbon development, the CBI has warned.
In a letter released today and co-signed by 18 business leaders from major companies including Aviva, Lloyds and ScottishPower, the business lobby group called for the government to deliver clearer leadership and a more stable energy policy to ensure capacity is not compromised.
"UK industrial firms already pay higher electricity costs than EU competitors, and spare capacity on our grid is getting squeezed as we phase out older power stations," said the letter, which was first published this morning in The Times.
The letter calls for the government to implement a "clear long-term framework" in order to unlock investment in major low-carbon energy projects. In a stab at the government's attacks on onshore wind, the letter also says the market should be open to new onshore wind developments if they have local support.
"Getting the investment we need to address [falling capacity] requires clear leadership and stable policy from government," the letter continued. "We need more of this in 2016."
The letter, which was signed by Renewable Energy Systems chairman Gavin McAlpine, also called for more attention to be put on developing energy storage and smart grid technologies to support the rise of renewables, as well as the expansion of gas and nuclear capacity, to "underpin" the UK's power grid. Meanwhile the complex regulations surrounding energy efficiency must be overhauled to ensure efforts to reduce energy use are not being hindered, the letter said.
Responding to the CBI letter, a spokeswoman from the Department of Energy and Climate Change (DECC) said the government is committed to providing investors with the certainty they need to ensure secure, affordable energy supplies.
"We have already set out our stall on what course energy policy will take over this Parliament and will set out more detail this year on our long-term commitment to move to a low carbon economy," she told BusinessGreen. "New gas power stations are being built and we are investing in cleaner energy, such as nuclear and shale gas."
The letter comes as a new study published today by the Institute of Mechanical Engineers found that the UK will face an unprecedented "energy gap" by the mid-2020s. Demand for electricity could outstrip supply by over 40 per cent, the study said, as older coal and nuclear plants are phased out without plans in place to replace capacity elsewhere.
The intervention comes just a few months after former CBI boss John Cridland warned the government's surprise decision to impose deep cuts on a host of renewable energy and energy efficiency schemes sent a "worrying signal" to investors and businesses.
"Over many years the UK has built up real credibility on climate leadership and low carbon investment. Hard won, but easily lost," he said. "And despite the progress so far, today's investors, the investors I have the privilege to speak for, are more uncertain about the UK's low-carbon future."
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