The National Infrastructure Commission (NIC) has urged Rishi Sunak to provide greater clarity on the dates and scale of Contracts for Difference (CfD) auctions as the first step in the government’s long-term post-pandemic recovery package.
In a letter to the Chancellor of the Exchequer, sent last week and published over the weekend, the NIC’s chair Sir John Armitt calls for the creation of a “strong pipeline” of CfD auctions to stimulate solar and wind projects. The letter identifies clarity on CfD auctions as the first “early action” the government can take to stimulate private investment in infrastructure.
He writes: “Government policy has shifted positively in this area, but industry needs clarity on dates and scale. Given the investment comes from the private sector and progress here would support net zero, this strikes us as a potential ‘quick win’.”
Sir John also urges government energy policy to incentivise private investment, particularly in the development of new power and heating technologies such as hydrogen with carbon capture and storage (CCS).
According to the letter, which outlines the NIC’s advice to the chancellor on the role that infrastructure can play in economic recovery plans, these measures could boost confidence and unlock private investment even if construction work is “some years” away.
Among proposed short-term stimulus measures, the NIC identifies energy efficiency measures as well as further investment in decarbonising the UK’s energy sources.
In his letter, Sir John also writes that the NIC has recently undertaken work to provide assurance that its headline recommendations are consistent with the statutory net-zero goal.
He adds that achieving net zero by 2050 is “mutually reinforcing rather than in conflict” with the commission’s other two key goals of improving long-term productivity and competitiveness while “levelling up” regional inequalities.
And Sir John writes that the NIC is planning to publish detailed studies over the coming months on how infrastructure systems might be better prepared for shocks.
The government was due to unveil its National Infrastructure Strategy in response to the NIC’s own blueprint, which was published in 2018, alongside March’s Budget but the launch was subsequently postponed.