The last 18 months have seen dramatic rises in the price of gas and electricity. Some users are facing bills up to 100% higher than last winter. At the same time, the UK has now become a net importer of gas and is moving towards being a net importer of oil. This has happened faster than expected and raises important concerns about security of supply.

Background

In 2003, the Government published an Energy White Paper which committed the Government to four main goals:

1. To put ourselves on a path to cut the UK's CO2 emissions by some 60% by about 2050, with real progress by 2020
2. To maintain the reliability of energy supplies
3. To promote competitive markets in the UK and beyond, helping to raise the rate of sustainable economic growth and to improve our productivity
4. To ensure that every home is adequately and affordably heated

• On 23rd January 2006, the Government published a public consultation document, ‘Our Energy Challenge: Securing clean, affordable energy for the long-term’. This document forms the basis for the Energy Review. The aim is to review the UK's progress against the Energy White Paper goals and the options for further steps to achieve them. The review closed on 14th April 2006 and is expected to report in the summer.
• The UK has a liberalized energy market. However, progress in introducing open energy markets in many other parts of the EU has been slow. On 8 March, the European Commission published a Green Paper on Energy, which it hopes will lead to increased liberalization. The Commission wants the EU to have a common energy strategy.
• Nuclear currently provides around 20% of the country’s electricity needs, but most of our nuclear power stations are scheduled to close over the next 20yrs. There is considerable current debate about whether or not a new generation of power stations should be built.

BCC Position

• Overall - We welcome the energy review. The Government has tough decisions ahead to ensure we have sufficient, secure supplies of energy at affordable prices whilst considering environmental consequences. It is vital that we establish a balanced long-term energy mix.
• Increased prices - Our members, particularly some of those in manufacturing industries, have been affected by increases in gas and elecricity costs of up to 100% over the last year. It is now a matter of urgency that the Government constructs a joined-up energy policy.
• Security of Supply - The UK is in transition towards becoming a net importer of oil and gas. This raises important concerns about security of supply especially as we become increasingly dependent on imported gas from potentially unstable countries. It is our view that maximising production of UK oil and gas should be a prime strategic objective for the Government.
• Domestic oil and gas - In addition to providing UK energy, and increasing security of supply, thousands of businesses depend upon this vital industry. We are concerned that the increase in Corporation Tax (SCT) that was announced in the PBR will damage the industry, as well as the many Scottish and UK based service and supply companies that depend upon it.
• EU markets - The UK has a liberalized energy market. However, progress in introducing truly open energy markets in the EU has been slow over the last three years. We want pressure put on other EU countries to fully liberalise.
• Alternative Sources of Energy - Fossil fuels will continue to make a significant contribution. However, as we become more dependent on imported sources, this must be supported by alternatives. Nuclear power currently provides a fifth of all our power but all but one of our power stations are set to close by 2023. We must have an open and balanced assessment of nuclear power, to settle the debate for decades to come. We must also explore all other options including renewables and energy efficiency.

For further information, please contact: -

Gareth Elliott
Policy Adviser
g.elliott@britishchambers.org.uk
Direct Line: 020 7654 5810
Mobile: 07834 897 607