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Why energy is crucial to industrial strategy success

Paul Reeve

The government published its industrial strategy towards the end of 2017 with the aim of Whitehall and private firms working together to improve productivity.

This was based on the five chosen themes of “ideas, people, infrastructure, business environment, and prosperous communities”. The strategy also features “four grand challenges”:

  • Maximising the advantages for UK industry from the global shift to clean growth.
  • Being a world leader in shaping the future of mobility.
  • Putting the UK at the forefront of the artificial intelligence and data revolution.
  • Harnessing the power of innovation to help meet the needs of an ageing society.

These challenges clearly include diversified energy, particularly electrical energy. Notably, the first two have clear implications for firms in the energy sector.

The industrial strategy says maximising the shift to clean growth means “leading the world in the development, manufacture and use of low-carbon technologies, systems and services”.

At present, the costs and strike prices of sources such as tidal and nuclear are still high compared with certain alternatives. Yet while nuclear and offshore wind get a good airing in the strategy, tidal barrages and onshore wind do not.

The strategy adds that the UK’s ‘clean economy’ could grow at four times the rate of UK GDP. Further low-carbon progress in power, transport, heating and cooling across the economy will, we are told, require the reallocation “of trillions of pounds of public and private finance”.

While not all the answers will use electrical energy, it’s clear that many will.

Clean growth and technologies

The recent Clean Growth Strategy, which sits just behind the industrial strategy, sets out ambitious proposals for further low-carbon energy progress through the 2020s.

In addition to plans to align policies, markets, regulations, taxes and investments to help commercialise UK energy technology, the industrial strategy makes “clean growth innovation” a priority. The government also pledged to join global initiatives such as Mission Innovation – a partnership for clean energy R&D.

Along with 2017’s electrical ‘Smart Systems and Flexibility Plan’, a new ‘Prospering from the energy revolution’ programme also aims to help businesses develop smart energy systems that will deliver cheaper low-carbon energy. The aim is to “remodel the grid” so that it can handle the challenges and opportunities of storage, real-time usage data, demand management, vehicle/grid charging, and the growing array of energy sources. 

Electric vehicles

The industrial strategy also appears confident that there will be significant growth in zero-emission vehicles.

A zero emissions road transport strategy is expected this year and, in addition to Faraday Challenge funding for battery technology, there will be measures to promote the uptake of zero-emission vehicles.

The strategy aims to support the construction and automotive industries in shifting to cleaner energy sources and production materials.

A new Transforming Construction programme will harness digital, low-carbon and energy-efficient technology to provide “places to live and work that use dramatically less energy to build and run”.

Meanwhile, the government will be looking for additional measures to strengthen the market for energy efficiency, and incentivise private investment in domestic and commercial energy efficiency. It will be interesting to see how this aligns with the progress of the Each Home Counts initiative, which contained proposals focused on the residential market. 

Emissions have been reduced by more than 40 per cent since 1990, while the economy has grown by two-thirds, successfully ‘decoupling’ carbon emissions from economic growth. This was a pipedream only a decade ago, but a clean energy future is now within our grasp.

Paul Reeve is director of business at the ECA

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