Action needed on green policy, warns Cridland

City Editor

Friday 6 July 2012

CONFEDERATION of British Industry director general John Cridland has warned that green policies and rising power prices risk sending energy-hungry companies overseas.

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TIM SHARP CITY EDITOR

Mr Cridland added that uncertainty and complexity could hamper the growth of green business and said action had to be taken to ensure the UK gets more economic benefit from the expansion of wind power.

He said it was right that the Government take steps to help those in fuel poverty. But he added: "There are vulnerable businesses too, those who are energy intensive and trade exposed."If UK energy prices are uncompetitive, these companies will fall prey to their international counterparts and be forced out of the country – or out of business altogether."Energy-intensive industries employ 225,000 people in the UK and account for 1% of the economy, but Mr Cridland said that in other countries such companies are offered help such as tax discounts.He added: "Allowing these industries to go offshore wouldn't prevent one molecule of carbon dioxide from entering the atmosphere, and in fact might produce more. And we're going to need their products for our green economy: low-carbon steel for wind turbines; low-carbon chemicals for electric batteries; low-carbon cement for eco-buildings."He warned that the sheer amount of regulations and taxes was creating too much complexity."Policies have grown up independently of each other and are intertwined in a gnarly mess," he said.Scotland has seen rapid development of onshore and offshore wind power and companies such as ScottishPower and Perth-based SSE have big expansion plans for wind energy.But Mr Cridland cautioned that the UK is not getting the full benefit of this industry."At the moment, for every offshore wind turbine that goes up in our waters, only one-third of the economic value originates in the UK."We should identify where we are well-placed to compete – there's no point trying to win everything. For example, the UK is not likely to oust the leaders on wind turbine design. But we could lead the world on offshore cable installation."And we should support new industries that could start life here and spread globally. Of the eight operating prototypes testing wave and tidal renewable power, seven are in UK waters."He called on the Government to encourage the flow of finance to green industries through measures such as underwriting loans so that wary financiers feel more confident committing their cash.He also demanded rapid action to give the new Edinburgh-based Green Investment Bank the power to raise money on capital markets.Matt Bonas, corporate finance lawyer with Bird & Bird, said that the UK should enjoy a competitive advantage in sectors such as wind, wave and tidal power but he warned that this is being eroded by competition from Asia, in particular China."The UK needs to raise its ambitions or face being left behind," he said.

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Action needed on green policy, warns Cridland

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