Issue brief - Energy Policy

Energy has risen to the top of the business and political agenda for the following reasons

1. The increased cost of electricity and gas which are now the highest in Europe

2. The need to develop a long term energy strategy for the UK to ensure a competitive and secure supply

3. The need to address climate change, reductions in emissions and promote energy efficiency

Following EEF pressure government set up the Business Energy Forum in the autumn of 2005 to monitor the situation short term through the winter of 2005/06. The group also developed contingency plans to address possible shutdowns and EEF remains a key stakeholder on this group heading into the winter of 2006/07.

Looking to the medium and long term the government published its energy review in summer 2006 and is now engaged in a detailed consultation process.

EEF published its own energy policy in a report entitled ‘ Sustainable Energy – A Long term Strategy for the UK ’ . EEF believes that government should pursue a balanced energy strategy which includes all options, including a new nuclear build programme.

Without such a strategy, EEF believes that industry’s competitiveness will be threatened by a more expensive and less reliable supply of energy and that there will be little chance of meeting the government’s aspiration to reduce carbon emissions by 60% by 2050.

EEF therefore recommends a number of steps for government:

· addressing planning, licensing and liabilities issues that will make a substantial difference to the rate of return required by investors in nuclear power;

· 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 zero carbon obligation in 2015 (the earliest feasible date in which a new nuclear plant could be operational with a zero carbon obligation.

· continue to pressure the European Commission to liberalise fully energy markets across the EU

· expand the UK’s capacity for gas storage

· introduce measures to increase the UK’s level of expenditure on energy research & development and boost energy efficiency