BritishAmerican Business (BAB) has published a new policy paper calling for a national energy strategy to bring down industrial energy costs and strengthen the UK’s position as a destination for US investment.

A UK Energy Strategy to Lower Industrial Energy Costs and Strengthen Business Investment in the UK finds that companies operating in the UK continue to face some of the highest industrial electricity prices in Europe, putting UK operations at a competitive disadvantage and increasingly influencing decisions about where companies invest.

The paper is published as political and business leaders meet in New York for Climate Week and ahead of Prime Minister Burnham’s first face-to-face meeting with US President Trump, with energy expected to feature in discussions.

UK energy policy has become an increasingly prominent issue in the transatlantic relationship, with the US administration calling for greater use of North Sea oil and gas and highlighting the importance of UK energy security.

The impact on investment

The report draws on government and industry data, as well as a BAB survey and interviews with companies across manufacturing, technology, defence, life sciences, energy, and food and drink.

BAB’s survey found that 43 per cent of companies consider industrial energy prices a major barrier to investment in the UK.

Businesses said the main effects were increased production costs and reduced, delayed or cancelled investment, with some also reporting lower output, profits and employment.

The scale of the challenge is significant:

• UK industrial electricity prices are 45 per cent above the G7 average.
• Analysis cited in the paper estimates that bringing prices closer to G7 levels could generate up to £250 billion in additional economic output over the next decade.

A competitiveness and growth issue

BritishAmerican Business CEO Duncan Edwards said:

“When UK energy costs are so far above those of our international competitors, it becomes difficult to make the case for investment here.

“Companies tell us that high energy costs are leading them to delay, reduce or cancel their investment in the UK. This is not just an energy issue, it is a competitiveness and growth issue.

“The government needs an energy strategy that brings costs down while providing the reliable and secure energy businesses need. The clean energy transition remains important, but it has to be affordable for the businesses being asked to invest and manufacture in the UK.

“With the Prime Minister meeting President Trump in New York this week, this is an opportunity for the UK government to set out a clear direction on energy policy and show investors that it is serious about bringing costs down and making the UK more competitive.”

BAB’s recommendations

The report sets out recommendations for a national energy strategy that includes measures to reduce costs in the near term, alongside changes designed to improve the UK’s energy security and competitiveness over the longer term:

• Reform the Marginal Pricing Model for Electricity
• Remove Policy Costs on Electricity Bills
• Scale the Electricity Grid
• Strengthen Investment in Clean Energy
• Increase Discounts for Network Charges
• Leverage Oil and Gas in the North Sea
• Invest in Fuel Refining
• Recognize Biomethane in the UK Emissions Trading Scheme
• Expand British Industrial Competitiveness Scheme (BICS) Eligibility
• Expand Access to Carbon Capture, Utilization, and Storage (CCUS)
• Facilitate Greater Use of Corporate Power Purchase Agreements
• Enable Behind-the-Meter and Private Wire Solutions
• Maximize Existing Dispatchable Biomass Generation

Read the full policy paper from BritishAmerican Business

This article is based on a policy paper and accompanying announcement published by BritishAmerican Business.