UNCERTAINTY ON PLANNING UNDERMINING ENERGY INVESTMENT

Business group sets out actions needed to deliver £150bn of low-carbon investment

The CBI today called on the Government to deliver key energy and planning reforms within six months, or risk undermining emissions targets and energy security.

Launching a new report; No time to lose: Deciding Britain's energy future,the UK's leading business group warned that without clarity on Government policy, £150bn of private sector investment in low-carbon infrastructure would fail to materialise. This investment is essential for the UK to achieve a secure, sustainable and cost-effective energy mix that includes renewable sources, nuclear power and fossil fuels.

The CBI said that uncertainty about the planning regime in particular is making investors wary of committing to new energy projects. The Government has announced it will abolish the Infrastructure Planning Commission (IPC) and replace it with a Major Infrastructure Unit with decision-making powers returned to Ministers.

Among measures the CBI is calling for from the Government by the end of February 2011 are tackling delays in the planning system, speeding up the development of carbon capture and storage (CCS) technology, and providing more detail on electricity market reform, its renewable energy policy, and the implications of the Emissions Performance Standard.

John Cridland, CBI Deputy Director-General, said:

"The Government's first few months in office have been rightly dominated by sorting out the fiscal deficit, but it must not let the timetable for energy and planning reform slip any further.

"Energy companies are unable to get the ball rolling on new infrastructure projects when it is unclear how the future planning regime will work.

"Uncertainty on plans for electricity market reform, slow progress on clean coal and nuclear power, as well as the cost of renewable energy are adding to the mood of caution among investors. We need investment from companies, not delays from government."

By the end of February 2011, the CBI wants the Government to have:

On planning:

Secured Royal Assent on a Decentralisation and Localism Bill which contains a coherent structure for major energy infrastructure planning, including requiring Ministers to stick to decision making timescales set out in the Planning Act and DECC Ministers having sign off for energy applications.
Completed the second consultation on Energy National Policy Statements on Energy Infrastructure and have the revised Statements ready to be approved by Parliament.
Determined all outstanding Section 36 planning applications left from the pre-IPC system.

On Carbon Capture and Storage (CCS):
Announced the winner of first CCS demonstration competition. Got the competition for the remaining three projects underway, with consideration given to one being a gas-fired power station.

On new nuclear power:
Pressed ahead with preparation for new nuclear, including deciding details of funded decommissioning and waste disposal agreements.

On additional market mechanisms:
Completed consultations on a carbon floor price and on wider market reform.

On North Sea taxation:
Ruled out changes to the tax system that would undermine investment. North Sea fiscal policy must recognise the mature age of most fields and the forthcoming cost of decommissioning.

On gas:
Reconsidered the tax treatment of gas storage in preparation for the 2011 Budget, including the capital allowance tax treatment of onshore salt cavern gas storage.

On energy efficiency:
Proposed ways to make the ‘Green Deal' financing mechanism work for households and firms, and simplified the Carbon Reduction Commitment to ensure it incentivises energy efficiency.

On energy intensive industries:
Consulted on ways to support the most vulnerable industries from the future costs of climate policy prior to an international agreement.

10th August, 2010

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