As if the government didn't have enough on its plate with the economy, there is another area crying out for decisive leadership - energy policy. The UK faces an unprecedented combination of energy challenges over the next decade.
Chief amongst them are replacing a significant proportion of our energy infrastructure, managing the risks associated with increasing reliance on imported natural gas and making dramatic cuts in carbon emissions.
To meet these challenges we will need hundreds billions of pounds worth of investment in a wide range of infrastructure and technologies, from upgrades to the grid and new gas storage facilities to renewable energy and nuclear power. And government has a crucial role to play - ensuring that the UK is an attractive place to invest and safeguarding the interests of energy consumers, who will ultimately pick up the sizeable bill.
Unfortunately the energy policy inherited from the last government is no longer fit for purpose. It was forged in an era when the UK was self-sufficient in fossil fuels, had a lavish margin of spare power generation capacity and more benign economic times meant the cost of subsidising renewable energy was subjected to limited scrutiny. A new strategic direction is needed based on setting clearer responsibilities for long-term energy security and a more flexible approach to meeting environmental objectives in which the focus is on cutting emissions rather than setting arbitrary technology-specific targets.
The government will need to move quickly. The regulator believes that the timescales required to secure finance, mobilise supply chains and deliver infrastructure mean that the energy industry will start making far-reaching and long-lasting investment decisions within the next couple of years. This leaves a very limited window of opportunity to implement new policies and institute market reforms in time to influence its decisions.
Energy is not an esoteric area of interest and importance only to technocrats in their ivory towers. Getting energy policy right matters. It is integral to most aspects of modern life from transport and communications to the lighting, heating and cooling of our buildings. It is also important to manufacturing and, by extension, the government's aspiration to rebalance the economy. For many manufacturers considering where to invest as the economy recovers, the security and competitiveness of energy supplies will be an important factor.
The need for strong and decisive leadership on energy is why EEF published its "Energy Action" yesterday. In this document we set out the key actions we believe the government needs to take, and by when, to get energy policy back on track.
Energy Action Plan.pdf (121.45 kb)