Energy cost crisis ‘threatens net zero investment’

Soaring energy costs are threatening industrial ‘net zero’ efforts, a new survey has found, risking a slowdown in the transition to low- and zero-carbon energy.

According to data released today (24 August) by the CBI, almost a third (30%) of surveyed firms expect energy price rises to act as a barrier to growth, by stifling current or planned investment in energy efficiency or net zero measures.

More than two-thirds of firms expect their energy costs to increase over the next quarter, the CBI said. “With many firms – particularly energy-intensive industries and SMEs – already feeling the pinch, further energy price rises could push many viable businesses to the brink unless urgent action is taken to support them and their supply chains.” 

The government should provide energy efficiency support for the most energy intensive sectors through an expansion to the Industrial Energy Transformation Fund, the business organisation said. A proposed three-point plan also calls on the government to announce a business rates freeze for 2023/24, to help keep costs down and avoid additional pressure.

“The impact of soaring energy prices on households is going to have serious consequences, not just for individuals but for the wider economy,” said Matthew Fell, CBI chief policy director.

“While helping struggling consumers remains the number one priority, we can’t afford to lose sight of the fact that many viable businesses are under pressure and could easily tip into distress without action.      

“The guiding principles for any intervention must be to act at speed, and to target help at those households and firms that need it most. 

“Firms aren’t asking for a handout. But they do need autumn to be the moment that government grips the energy cost crisis. Decisive action now will give firms headroom on cashflow and prevent a short-term crunch becoming a longer-term crisis. 

“With firms under pressure not to pass on rising costs, there is a risk that vital business investment is paused or halted entirely. That in turn could pose a real threat to the UK’s economic recovery and net zero transition.”  

Become a net zero expert at Sustainability in Engineering (26-30 September), part of the Engineering Futures webinar series. Register for FREE now.

Content published by Professional Engineering does not necessarily represent the views of the Institution of Mechanical Engineers.