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UK energy sector needs £330m investment by 2030

The UK energy sector needs £330bn investment by 2030 for the Government to hit carbon emission reduction targets, according to the London School of Economics (LSE).

A new report from one of the UK’s best universities for graduate prospects said businesses must prepare for three possible eventualities, that range from continued economic depression in the UK, to a complete rejection of environmental targets that favour cheaper fuel options.

LSE’s report, the “npower Future Report”, investigated the possible scenarios for 2030, and examined contributing factors that could shape the landscape of the economy and the energy sector.

The report firstly showed the most positive scenario; that the UK would meet energy targets, which would require a focussed political direction, industry investment of £330bn and strict carbon emission reductions.

To hit these goals, LSE warned that the Eurozone and UK economy must recover through “green growth”, improved integration of trade and productivity gains.In a second potential outcome, LSE predicted that changing to gas power would provide short term gains, but have a detrimental impact on the environment.

Carbon targets would be missed as a result of this change over, however the need for structural change would be less urgent, and improvement in the Eurozone would be less critical.

A third eventuality predicted continued austerity, low confidence and investments, with stagnation in UK markets while emerging countries such as Brazil, China, India and Russia storm ahead.

Professor S. Fankhauser, who penned the report and is Co-Director of the Grantham Institute on Climate Change and the Environment at LSE said: “This report shows how fragile and delicate the equilibrium of factors is for protecting the future of the UK energy industry.

“A slight change of emphasis in policy, a weakening economic picture or a preference for cheaper energy sources over low carbon energy generation could result in very different operating environments for UK businesses.”

The Professor warned that businesses must prepare themselves to act on challenges that may come up in the future.Chief Executive of RWE npower, Volker Beckers, said to reach the high levels of investment that LSE’s report recommends, the UK energy industry, the Government, and businesses must collaborate.

Wayne Mitchell, Director of Industrial and Commercial Markets Director at npower commented: “Managing energy well and making it a strategic issue is vital. A focus on energy efficiency and making good use of self-generation energy technologies are also crucial.

“I would also encourage UK businesses to follow policy developments and understand the implications for their organisation.

Mr Mitchell concluded: “In addition, calling for a level playing field in the industry and being ready to commit to the will to decarbonise the energy supply, are essential actions for UK businesses to ensure they are well-placed for the immediate future challenges facing them as well as for any potential scenarios by 2030.”

This was posted in Bdaily's Members' News section by Miranda Dobson .