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Consistent government policy and support is needed to deliver on 'extremely ambitious' clean growth strategy, says expert

The UK government must maintain a consistent approach to its policies and support for a low carbon economy of the future over the long term to encourage the level of investment required from businesses to deliver its "extremely ambitious" clean growth strategy, an energy law expert has said.

Ian McCarlie of Pinsent Masons said the strategy (165-page / 5.72MB PDF), set out by the government on Thursday, represented a comprehensive package of measures that, together, are designed to help reduce the cost of energy for both businesses and consumers. He said, though, that a lot of work is needed to realise the full potential of the government's plans.

"The UK clean growth strategy is full of positive announcements that should garner all-party support," McCarlie said. "Although it does to some extent consolidate measures that have previously been pronounced, it provides welcome momentum and vigour to the drive to continue greening the UK’s economy. Energy is a strategic priority for the country and, whatever form Brexit takes, the lights will need to be kept on. The UK will want to be seen as a market-leader in energy efficiency and clean energy, so this announcement is well-timed."

"However, the strategy is extremely ambitious. What the UK needs to make sure this is achieved is a government that has learnt its lessons and sticks to its guns. Investors need assurance that the government will now commit fully to delivering what has been announced without backtracking or intervening on short notice, as it previously has over initiatives like carbon capture, usage and storage, which appears to be back on the agenda again," he said.

"Some elements do require clarification to understand how they will work in practice. For instance, energy efficiency measures for consumers must work this time, and not end up the damp squib that the Green Deal turned into. Business will also want a clear line of sight on the timings and roll-out of legislation, so they can plan and prepare as early as possible and embrace the opportunities," McCarlie said.

"What businesses want overall, though, is for secure and competitive energy costs, and to see hard evidence of the government investing in measures that will enable this to happen for the long term. If government can meet this first priority as a pull for businesses, it will be a lot easier to push them along the path of compliance with new green initiatives," he said.

Included in the new strategy are plans to incentivise the installation of more energy efficient measures in the home, including through the Energy Company Obligation (ECO), and measures to help cut emissions stemming from commercial premises, such as through a new industry energy efficiency scheme, a possible raising of minimum standards of energy efficiency for rented commercial buildings, and industrial decarbonisation and energy efficiency action plans for seven energy intensive industries.

Businesses in the cement, ceramics, chemicals, food and drink, glass, oil and refining, pulp and paper sectors will be impacted by the industrial decarbonisation and energy efficiency action plans established.

The strategy also contained plans to reform the renewable heat incentive as part of a package of measures aimed at moving towards low carbon heating of properties, as well as a commitment of £900 million of public funds towards research into new technologies in areas such as electricity storage, demand-side response, and offshore wind.

The government also announced plans to help promote the financing of 'green' energy initiatives by lenders, and opened a separate consultation (40-page / 435KB PDF) on proposals which, if introduced, would require both UK quoted companies, and some unquoted businesses, to report details of the greenhouse gas emissions they are directly and indirectly responsible for within their annual reports.

Minister for climate change and industry, Claire Perry, said: "The proposals here for mandatory reporting are designed to be simple, to align with what we have been told about best practice in the UK and internationally, to potentially build on the existing mandatory reporting of greenhouse gas emissions by UK quoted companies and to ensure we are not imposing unnecessary administrative burdens on UK business."

"The UK government is not creating new standards, we are simply requiring businesses to measure energy and carbon using existing standards. The purpose of reporting is to raise awareness with decision makers within companies, and to inform markets and government policies," she said.

In its new strategy, the government also set out its plans to support future Contract for Difference (CfD) auctions for renewable technologies with additional funding. The government said that it intends for "wind projects on the remote islands of Scotland that directly benefit local communities" to be eligible to participate and win funding in the next auction due in spring 2019, "subject to obtaining state aid approval".

Further plans to support the electrification of UK transport, including through investment in new charging points for electric vehicles, were also outlined in the new strategy. The government previously announced plans to ban the sale of new petrol and diesel cars in the UK by 2040.

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