Memorandum submitted by CBI (EN 09)

 

1. The CBI is the UK's largest and most broadly based business-organisation, representing the interests of some 240,000 businesses that together employ around a third of the private sector workforce, covering the full spectrum of business interests both by size and sector. The bulk of our members are energy users, however energy supply companies and energy technology companies are also in membership.

 

2. The CBI broadly supported the recent Energy White Paper, and therefore broadly supports the content of the Bill which implements many of the commitments made in the White Paper. The UK needs a diverse, low carbon, cost effective energy mix, and major investment in the next few years is required to deliver this. Much of the Bill is intended to put in place the legal and policy framework within which this investment will take place. The remainder of this evidence summarises CBI thinking on the key elements of the Bill.

 

RENEWABLES OBLIGATION (RO)

3. On balance, we support the proposals for banding the RO. We are wary of the risk that changes to the RO will undermine investor confidence, but we recognise the need to focus the RO on renewable technologies which have potential but are less commercially viable. Importantly, the Bill does guarantee that investments made prior to the banding announcement will be unaffected.

 

OFFSHORE GAS IMPORTATION/STORAGE

4. As the UK Continental Shelf output declines, the UK will inevitably import increasing amounts of gas, even if the proportion of low carbon electricity generation increases substantially. It is vital that adequate importation and storage capacity is in place, and for this to happen the legislative framework needs to be updated and streamlined.

 

NUCLEAR

5. The CBI supports the Government's recent decision to allow new nuclear build. We also support the policy framework which the Government has set out and to which the Bill will give effect, namely; no operating subsidy for nuclear; operators to bear decommissioning costs and the relevant waste management costs.

 

CARBON CAPTURE AND STORAGE

6. Our recent Climate Change Task Force report calculated that if we are serious about meeting the UK's carbon targets, virtually all feasible abatement technologies will need to be deployed. We are disappointed with the time taken to decide upon, prepare, and launch the Government competition to allot support for a CCS demonstration project, but now that this is underway the legal framework for CCS needs to be in place. Therefore we support this section of the Bill.

 

OFFSHORE RENEWABLES

7. The important role of offshore wind, and potentially, other marine renewable in contributing to UK carbon targets was emphasised in the CBI's Climate Change Task Force report. The various provisions in the Bill to put in place a legislative framework for the deployment of offshore renewables is welcome.

 

'SMART' METERS

8. The CBI notes that the omission of any additional powers to mandate the rollout of 'smart' meters from the Bill has attracted some concern from some stakeholders. The CBI Climate Change Task Force supported the principle of 'smart' meters and called for early Government decisions on their potential and feasibility. We understand that the Government believes that existing legislation can be used to mandate 'smart' meters should this be decided upon, and therefore the omission of any new powers from the Bill is less of an issue. We also recognise that the determining the costs and benefits (both in financial and carbon terms) of 'smart' meters is complex. However, we would hope that the Government is able to reach decisions on their role in a timely manner.

 

February 2008