Wayne Mitchell, director of markets & innovation at Npower Business Solutions, says it’s a myth that businesses do not care about energy and climate policy. But he says they need a simpler and more stable framework to be able to deliver change
The transition from a coalition government to a single party leadership was expected to provide the energy sector with more stability than it has had in years. Five months in, however, there is perhaps even more uncertainty about how the energy policy landscape is likely to evolve. The regulatory package faced by UK businesses is currently a pressing concern for businesses in the UK.
The current consultation will review the Climate Change Levy and CRC Energy Efficiency Scheme, as well as how they interact with other policies and regulations.
We welcome this review and the businesses we’ve spoken to agree. Our research shows three quarters (74%) of manufacturers said that they agreed or strongly agreed that there was too much energy-related bureaucracy. This doesn’t mean they don’t care about sustainable energy; simply that they want to be able to more easily and efficiently manage their regulatory obligations.
Many businesses understand and accept the need for business to pay their way; they would accept cost neutral energy legislation landscape if it meant there was less red tape in reporting.
Whilst we support the spirit of the consultation, we are concerned that clarity around its proposed changes, as well as timing allocated for response may mean that British businesses don’t have a proper chance to have their say.
It is a myth that businesses don’t care about energy policy; 81% of those we surveyed said they felt it was important that they contributed to the consultation and over half felt their views aren’t being represented by government policy. We can clearly see that businesses both support the consultation and want to get involved.
However, the consultation has been given a short window of around six weeks; closing on 9th November, which could work against the stated objective of ensuring a broad and reflective response. Whilst I’m sure the consultation will receive some responses from UK businesses, a proper opportunity to respond must be given if any resulting policy is to appear credible and democratic.
This lack of clarity is also reflected in the terms of the consultation itself; businesses will be interested to know which areas of government will be administering any new framework. The process is being managed by Treasury however the scope of the proposed changes covers a number of policy areas, spanning several Westminster departments and the EU.
Businesses also need to be sure about which companies / sectors could be impacted by potential changes in regulation, something which is not currently clear. Uncertainty can deter investment and can dissuade firms from making critical long term energy plans.
Of the details which have emerged from the consultation, there are a few issues which need to be carefully handled to ensure sound policy decisions. It proposes using the Energy Saving Opportunity Scheme (ESOS) as a metric, which could be problematic. This is because not all organisations that have to report under CRC or CCA would be required to do so under the new criteria.
The Government also needs to ensure incentives remain to encourage businesses to invest in energy efficiency and carbon reduction. 65% of the manufacturers we surveyed expressed concern about this, especially as the Chancellor recently announced that renewable energy will lose its exemption from the Climate Change Levy (CCL).
The consultation presents a wonderful opportunity to create a lean and more effective regulatory regime, which still encourages the careful and sustainable use of energy. However, the consultation and resulting policy needs to be delivered in a way that it listens to and accommodates legitimate business concerns.
First published in New Power, November 2015.
Also in this issue:
INTERVIEW
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EXCLUSIVE RESEARCH
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FEATURES
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How long-term investors are moving in to the onshore wind industry
PLUS:
Scotland’s MSPs consider security of supply
Addressing industry Code development
What is a zero-subsidy CfD?
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