BritishAmerican Business (BAB) has published a new report 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 new report draws on government and industry data as well as a BAB survey, and interviews with companies from a cross range of sectors including 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 £250billion in additional economic output over the next decade.
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 set outs recommendations for a national energy strategy which includes measures to reduce costs in the near term alongside changes 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 report here.
About BritishAmerican Business
BritishAmerican Business is the leading transatlantic trade association incorporating the British-American Chamber of Commerce in the US and the American Chamber of Commerce in the UK.
We are committed to strengthening the economic corridor between the United States and the United Kingdom by supporting policies and actions that protect and enhance the environment for transatlantic trade and investment on behalf of our members.
We convene and serve a growing network of companies and business leaders through networking opportunities, bespoke programming and marketing platforms. We actively promote trade and investment and support those who make the transatlantic corridor part of their business growth ambition.