FDBusiness.com

CPI director general David Workman has called on the government to take action to ensure that the UK has enough generating capacity to maintain energy supplies over the coming years

In his New Year briefing to Parliament, he said that the issue was important because aging coal-fired power stations are starting closed in order to comply with the EU’s Large Combustion Plant Directive.

He also calls for action to be taken to reduce the burden on manufacturing of achieving the UK’s ambitious Climate Change goals.

Workman suggests the following:

• The government seeks derogation to the Large Combustion Plant Directive so that no power station is closed before it comes to the end of its natural life;
• The lives of existing power stations are extended to make time for a more cost effective upgrade to the current generating fleet;
• The UK should develop its shale gas reserves as quickly as possible;
• Gas should be the fuel used in the short term to replace coal;
• The Carbon Price Floor policy should be abandoned;
• more support needs to be given to investment in, and operation of, on-site industrial Combined Heat and Power plants; and
• the compensation package currently on offer to Energy Intensive Industries in order to mitigate the on-cost associated with developing renewable energy, should be at least as generous as that on offer to German industry.

Elsewhere, Workman added: “In his recent report ‘No Stone Unturned in Pursuit of Growth’ Lord Heseltine stated that a secure and affordable supply of energy is essential to everything we do.  I do not believe that either is a certainty unless the government acts to defer current plans to close capacity and acts to fully compensate industry for the additional costs associated with the EU’s Emissions Trading Scheme, the Carbon Price Floor and other climate change measures.

“The development of shale gas around the world is a game changer as it has led to a significant reduction in gas and electricity prices in some of our competitor countries, particularly in North America. If manufacturing is to play a significant part in re-balancing the economy, the government must heed Lord Heseltine’s comment”.