Government must use the current energy review to commit itself to boosting the UK’s inadequate levels of research into new energy technologies, as well as announcing a programme of nuclear new build, according to Britain’s manufacturers.
Publishing its response to the government’s energy review consultation, EEF, the manufacturers’ organisation backed its call by revealing analysis which shows the UK spends just 0.02% of GDP on energy R&D. This is a tenth of what is spent in the United States and below all EU 15 members except Portugal.
Whilst backing the Chancellor’s views expressed in a speech to the United Nations last week that tackling climate change can run in tandem with preserving economic growth, EEF believes that these figures are at odds with government claims to be taking a lead in addressing climate change. In addition, failure to increase the amount spent on research will lead to the UK missing out on the chance of taking a technological lead in an area that will bring long term economic benefits.
EEF Director General, Martin Temple, said:
"Given we are the fourth largest economy in the world, our level of investment in energy research is woeful and government needs to examine how it can bridge this gap as a matter of urgency.
"Investing in energy research will provide a win win for government. Not only would it extend the weapons in our armoury for tackling climate change, it would bring opportunities for UK business to develop a real technological lead, providing a solution to the problems that we face as well as lasting economic benefits."
EEF believes as a first step government could signal its intentions by improving incentives for Research & Development into energy efficient products and processes by increasing the rate of credit associated with R&D in this area. It should also increase access to enhanced capital allowances for investment in energy efficiency and new energy sources such as clean coal.
The submission also re-iterated EEF’s view of the need for a balanced long term energy strategy which includes all options, including nuclear. Whilst EEF does not believe government should underwrite the nuclear industry, it believes that it must address planning, licensing and liabilities issues that will make a substantial difference to the rate of return required by investors.
EEF has set out its own balanced long term energy strategy in its report ‘Sustainable Energy – a Long Term Strategy for the UK’ . This includes a range of options which feature fossil fuels (gas and coal), renewable energy and nuclear power (1). In addition to a commitment to a nuclear new build and measures on energy research the strategy urges government to:
make a decision on the disposal of radioactive waste
exempt nuclear power from the climate change levy, given that it emits no carbon, which would sent out a powerful signal to potential investors
replace the current Renewables Obligation with a low carbon obligation in 2015 that covers all energy sources with low or zero carbon emissions
extend Climate Change agreements to other parts of manufacturing and the wider economy
improve the effectiveness of measures to increase energy efficiency across the economy