Rachel Cary
Head of Business Decarbonisation, Energy UK
Decarbonising our economy is a huge undertaking but offers businesses the opportunity to future-proof operations and save on energy costs, driving economic growth.
The Government can play an important role in growing low-carbon sectors and the 2030 Clean Power target demonstrates huge ambition. Alongside this, it needs to support businesses in all sectors to decarbonise so they can remain competitive.
Gas price shocks and impact on businesses
The gas price shocks as Covid-19 lockdowns ended and Russia invaded Ukraine led to businesses passing costs down to consumers, while others reduced or ceased operations. Some energy-intensive businesses had long-term agreements in place, but in the middle of the crisis, others had to agree to expensive energy supply contracts.
The Government spent £20 billion to provide vital support to non-domestic energy customers. While welcome, none of this helped companies reduce energy use or move away from gas, which are the long-term solutions that would cut costs.
The funding available to help industry
decarbonise has been paused and is
being reviewed by the Government.
Limited decarbonisation support for SMEs
Government support for decarbonisation is currently focused on those close to emerging carbon capture and hydrogen clusters — and limited to large players. The funding available to help industry decarbonise has been paused and is being reviewed by the Government. There is also minimal support for small and medium-sized enterprises in England and Wales, which have struggled with energy bills and need more funding and technical advice.
Electricity costs hinder decarbonisation
As well as reducing energy use through investing in efficiency, businesses can move from gas to electric heating and processes, which is much more efficient. However, a key challenge is that electricity is five times more expensive than gas due to policy costs placed on electricity. This deters companies from investing in equipment that enables them to generate heat with low-carbon electricity.
It is vital that the upcoming Spending Review includes adequate support for businesses to decarbonise and addresses the electricity-to-gas price gap. This will make businesses more productive and attract investment — the key ingredients for growth.
Read more in Energy UK’s report, Full Power: The role of the energy sector in decarbonising businesses, which explores how the energy and business sectors can work together to cut costs and maximise growth.
