The UK risks generational damage to its industrial base unless it can offer the right mix of stable energy policies, the director general of the Confederation of Paper Industries has warned.
Andrew Large, who is also a former chair of the Energy Intensive Users Group (EIUG), warned a cross party group of MPs and Peers that financial institutions have plenty of choices about where to invest.
He warned that failing to act now will have implications for the next 25 years, with investment in the UK at risk of being pulled.
He said: “They are looking globally at who has got the best policy mix in order to deliver the kind of stability that they need to be able to guarantee their investment decision making.
“If the UK doesn’t get its act together, then they won’t spend the same dollar or euro twice, they’ll invest in the United States, European Union or elsewhere.
“These are long-lived, capital-intensive investments: once that decision is taken, it’s taken for 25 years.”
He added: “Decisions taken today will be impacting what the UK industrial base looks like in 2050 and beyond so we have to get that policy stability and clarity right.
“It worries me that we’re going to lose probably a year to 18 months in the run up to the election when we’re not going to get that clarity.”
Large’s confederation represents 79 paper companies, which employ or indirectly support around 150,000 UK jobs.
Jeremy Nicholson, corporate affairs officer at consultancy Alfa Energy Group, expressed concern that the government is still only promising consultations in areas like network upgrades when tangible actions are required.
“These are the sorts of magnitude of changes that either get delivered within the first year or so of a government with a relatively healthy majority or they tend not to get delivered at all.”
And while the government’s recent commitment to invest £20 billion in CCS (carbon, capture and storage) sounds big, the sum must be seen in the context of the 20 year period over which it is due to be spent, he said: “In terms of the decarbonisation challenge, that’s not a huge amount of money for what may be needed.”
Nicholson, who is a former director of the EIUG, also criticised the government for being unambitious by pledging to deliver one of the cheapest wholesale electricity market costs in Europe when the entire continent is increasingly uncompetitive on energy with the wider world.
“If that is to be our benchmark, we’ve got serious problems. We should be aspiring for something rather better in terms of international competitiveness.”
Alice Barrs, head of UK policy and public affairs at RWE, told the same meeting that the company would “like to see more action on” responding to the US Inflation Reduction Act.
In particular, she expressed “serious concerns” that the upcoming Contracts for Difference (CfD) auction round five will fail to deliver the “full potential” of the UK’s offshore wind industry.
Barrs said the 40% increase in offshore wind investment costs since 2021 have not been factored into the latest auction’s parameters.