Brevia

Companies in the UK energy sector employ over 600,000 people and generate revenues exceeding £90 billion from domestic and international business. With such a dramatic upheaval to the infrastructure of the sector needed in order to switch to sustainable energy sources, the industry is expected to grow rapidly in size over the coming years.

As the supply and desirability of traditional energy sources diminish, with the resulting problem of rising prices on fossil fuels, much emphasis has been placed on developing renewable energy sources in order to facilitate the move to a low carbon economy. With a 2020 target of 15% of energy from renewables, equivalent to a 7 fold increase from 2008 levels, the UK has the most challenging target of all the EU members. Indeed, the UK energy industry, which has the most offshore wind capacity in Europe, is regarded as a leading innovator in the development of renewable energy and is Europe's top investment destination for the energy sector. The Government is also investing heavily in clean fossil fuel technology as well as regeneration of nuclear power.

The European Commission’s energy target of 20:20:20, as well as aims to reduce CO2 emissions by at least 80% by 2050, present substantial challenges to the industry. Ernst & Young estimates that by 2020 at least £200 billion will need to have been invested in low carbon infrastructure. Coal and oil energy is set to decrease while electricity demand is set to rise due to its increasing use in the transport sector. Thus, the UK is investing heavily in energy saving measures Government and traditional sources of funding for low carbon investment are limited. Therefore, substantial investment will be needed from new private sector sources, particularly from foreign companies. New mechanisms like the Green Investment Bank and carbon pricing will be critical in order to help attract new and drive existing investment into the low carbon economy.

It is critical that experts and professionals within the UK energy sector play a role in helping to shape the policies and legislation which are fundamental to the future of the industry and the UK. It is only with input from such experts that the Government will choose the right policies. In a coalition government, with differences of opinion within, such collaboration is all the more necessary. Since climate change is a global issue, international collaboration is also essential to finding a solution and the European Commission is dedicated to coming to an agreement on an EU-wide energy policy. Indeed, the EU has a responsibility to provide central funds for the energy industry, particularly with regards to research and development. Therefore, the UK energy sector must work closely together with the Government in order to secure legislation conducive to the industry’s success in meeting its ambitious targets.