Long-awaited green light for some key policies, but will it be enough to keep green investment flowing in the UK?

Responding to today’s Energy Security Plan announcements from the Government, Simon Virley CB, Vice Chair and Head of Energy and Natural Resources at KPMG in the UK, said:

“The UK is in a global race for investment; the Inflation Reduction Act in the US is a game-changer, and the EU is trying to respond through its own Green Deal.  Investment decisions are being made now and the UK will lose out if we fail to set out clear and bold plans to attract green investment. While today’s announcements are welcome in updating the Government’s approach, the big test remains: will they be enough to persuade those businesses, who are now weighing up options in the US and the EU, to continue investing in the UK? Only time will tell.”

On CCUS Track 1 Cluster announcement:

“The UK has unique geographical advantages with offshore CO₂ stores located close to our industrial clusters.  It is good news that the first eight projects in Teesside and Merseyside are now going to move forward.  But the absence of any projects in the Humber region, the largest industrial cluster in the UK, is a real setback.  Promises of further rounds will be little consolation to those investors having to make tough investment decisions right now.  If we want to be ‘world leaders’ in hydrogen and Carbon Capture and Storage, we have to be bolder and move more quickly, particularly given the support now on offer in the US and the EU for industrial decarbonisation.”

On the plan to shift the low carbon levies from electricity to gas:

“As we decarbonise our power system there is a logic to shifting the low carbon levies to gas, to encourage the take-up of low carbon technologies like EVs and heat pumps.  But we now urgently need a national conversation about the transition to Net Zero, what investments will be needed, the costs involved, and how we maximise the benefits from the transition.”

On the energy efficiency measures:

“The UK has set a target of reducing energy demand by 15% by 2030.  Some European countries have delivered that already this winter as part of national campaigns to limit the economic impacts of the war in Ukraine. While the steps announced today on the future of the ECO scheme are welcome, we still need a step-change in energy efficiency in the UK, which is the best way to reduce bills permanently, improve energy security and lower carbon emissions.”