Govt. U-turns are biggest threat to British energy sectors – especially renewables – warns UK Energy Institute

Energy Institute logo2Thousands of energy professionals across the UK are worried about the threats to their industry from ongoing uncertainty caused by frequent changes to British Govt. energy policy.

And despite the euphoria surrounding the Paris Climate Change Agreement, they also express scepticism about the signatories’ ability to meet the targets set last December.

In the second of the Energy Institute (EI)’s Energy Barometer annual surveys – being launched in London today – a representative sample of EI professional members were invited to share their views on energy issues currently facing the industry.

The Energy Institute (EI) is the leading chartered professional membership body for the energy industry, supporting over 23,000 individuals working in or studying energy and 200 energy companies worldwide.

‘Continuity in energy policy’ is the top concern with a ‘lack of investment’ a close second.

The long term impact of a low oil price, along with the need for’ whole-system thinking’ and longer term planning have also emerged as top issues in the past 12 months.

Professor Jim Skea
Professor Jim Skea

Professor Jim Skea CBE FEI FRSA, President, Energy Institute, said:

‘The EI’s Energy Barometer 2016 report shows that the single biggest wish for people working in UK energy is a stable energy policy to help industry and financiers decide where to invest profitably and, more crucially, to allow for long-term planning.  

“Renewable energy and capturing carbon – key to implementing the Paris climate agreement – are seen to have been particularly badly hit by policy changes over the last year.

Most respondents to the survey (70%) do not think the Paris agreement will be sufficient to hold global temperatures below 2°C, and are concerned that the policies in place are not having the desired effect.

Malcolm Brinded, CBE FEI FREng, Vice-President, Energy Institute, added: “This year’s survey reflects concern that lack of policy continuity leads to under-investment in both UK energy technology and infrastructure.

“This is considered to be the largest barrier to innovation and the delivery of the low carbon energy system needed to meet future demand and emissions targets, securely and affordably.’

“Policy uncertainty relating to carbon capture and storage (CCS) is viewed as having a particularly negative impact on industry, as are policies relating to renewable electricity deployment, reducing fuel poverty, and simplifying energy taxation.”

Furthermore, a majority of respondents think the UK will fall significantly short of its goal of reducing emissions by 80% below 1990 levels by 2050. Policy support for new nuclear power stations, however, is seen to have had a net positive effect, along with energy efficiency improvements.

Other key findings include: 

  • Investment risk and impact of low oil prices
    stands out as the technology most subject to investment risk due to policy uncertainty, but nuclear and renewable energy are also perceived as high risk.
  • Low oil prices are an additional factor discouraging investment, not only in UK oil and gas supply, but also in energy efficiency and the low carbon technologies needed for a sustainable energy transition.
  • Energy efficiency bucks the trend for investment risk due to policy uncertainty, and is viewed as low risk. 

Impact of EU referendum
An overwhelming majority of contributors to the EI’s Energy Barometer foresee negative effects on the UK energy system should the UK leave the EU. 

In terms of securing energy supplies, renewable energy development, climate change and sustainability, and air quality, about four times as many respondents foresee negative effects than see positive ones.

The single exception to this pattern was oil and gas production, where positive and negative views were broadly balanced.

Professor Skea added: ‘I commend this report, and the insights it provides, to anyone in the private or public sector with a stake in the future of UK energy.’

The complete set of data used in this Energy Barometer report is available online

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