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Net zero at risk from energy price squeeze: CBI

Increase in energy and gas prices.

The latest survey on energy costs among British businesses reveals that planned investment in energy efficiency or net zero measures is likely to suffer from increasingly tight margins. Yet it is precisely this that would have provided relief from the current pain.

More than two-thirds of firms expect their energy costs to increase over the next quarter.

A third of firms expect this to impact their net zero and energy efficiency measures.

It is not too late for the government to focus on energy efficiency measures across business and industry as well as households.

The CBI has proposed a 3-point plan that can be delivered at pace to support vulnerable consumers and businesses by targeting help where it is needed most. It both looks at cutting costs, and kick-starting an energy efficiency drive that reduces demand and boosts the UK’s energy security.  

Government help aimed at deep decarbonisation

Expansion of the Industrial Energy Transition Fund is the tool that the CBI proposes to abate energy use in businesses. The Fund, in Phase 2, is directed at deep decarbonisation deployment, including fuel switching and carbon capture technologies. These are highly expensive technologies that could be preceded by heat pumps for instance. 

The IETF offers support in reducing payback periods to enable private finance in energy efficiency projects. It also aims to generate knowledge sharing of transformative energy efficiency measures. The Department for Business, Energy & Industrial Strategy says the IETF will be a front-runner in de-risking decarbonisation technologies for industry.

Where are the heat pumps?

It is four years, like with the IETF, since the Clean Growth Strategy set an ambition to support businesses to improve their energy efficiency by at least 20% by 2030. Cost savings this would have brought about were calculated as £6 billion.

The Heat Networks Investment Project was launched in 2019, with a £16.5 million electrification of heat demonstration project, to explore the feasibility of a large-scale transition to heat pumps and innovative solutions that work for a wide range of homes and businesses.  Powered by energy from waste, over £250 million has been awarded under the scheme, but the installation of heat pumps has made barely a pin-prick of difference.

A new report published by the ACE Research and Energy Saving Trust for the Scottish government finds that readily available low carbon heat solutions emit zero direct greenhouse gas.  Simple solutions such as direct electric heaters, electric storage heaters, electric boilers, solar thermal technologies, heat pumps, heat networks and fuel cells have an under-estimated part to play.

The current climate of high energy prices, which are set to rise following the recent announcement of an almost doubling in the price cap, is pushing many viable businesses to the brink.

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