Act now to shore up confidence and avoid future energy crises - CBI Chief urges government to unleash plan for net zero transition

CBI CEO Rain Newton-Smith will today (Wednesday) warn that with business confidence hit by speculation about tax rises, the government must not “take a step back” on their plan to boost economic growth. After making impressive post-election moves to catalyse investment and bolster the business environment, Newton-Smith will set out why “net zero is the foundation for growth and the security of our economy.” 

Speaking to Business Green’s Net Zero Festival, Newton-Smith will say that “the hardest part is transitioning sectors across the rest of our economy – beyond just the power sector.” She will call on the government to “provide detailed pathways for all sectors, through a framework that inspires business confidence.”  

In a speech to business leaders and policy makers, Newton-Smith will caution that there is a “clear and present danger the UK could be exposed to another energy crisis”, if we don’t set out and accelerate a clear, economy-wide transition plan. 

On the urgent need to build our green economy, CBI CEO Rain Newton-Smith will say: 

“There is a clear and present danger we could be exposed to another energy crisis. 

“The IMF has shown we – businesses and people across the UK – were hit harder than any Western European country, owing to our reliance on volatile gas prices.  

“Now as we go into winter 2024, household energy bills are still on average 500 pounds higher than pre-crisis.    

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“The green economy is essential for growth: I’ve said it before and the CBI will keep saying it. But it’s even more urgent than that. Net zero is the foundation for growth and the security of our economy. Without it, we’re building on sand. 

“I’ve warned before about the need to be positive – to show investors the potential in this country and its economy, not the pitfalls. And there’s been a real shift in tone from government. 

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“Our sense is that message is filtering through. There’s a feeling that things are really starting to move. And there should be. Just look at what the energy department, DESNZ, have done recently. They’ve moved mountains in a matter of weeks.” 

On the importance of an economy-wide energy transition, Newton-Smith will say: 

“Reaching net zero in the UK and the energy security we so badly need… is a two-speed problem. On the one hand, you have investment in green energy generation. Projects that are like magnets for investment.   

“On the other, you have the costlier, more complex transition: changing what we already have. Transitioning the whole of our economy.   

“We’ve cut the UK’s carbon emissions by more than 50 per cent since 1990. Huge progress – but more than half of that has been just in our power sector.   

“The next part of the journey, the harder part, is transitioning sectors across the rest of our economy.   

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“A huge part of the energy crisis was that we’ve done so little to tackle energy inefficiency in our homes and buildings. For every degree of heat a German home loses, a UK home loses three. These are the problems we’ve got to solve next, and you can’t underestimate how complex it’s going to be.    

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“What’s crystal clear from the start is, government can’t do this alone. They need to share the load with business. The market needs room to innovate and get this right.   

“But at the same time, investors need the detailed pathways for all sectors.   

“They need the framework to inspire confidence: how and when government support will be available, to create the revenue streams which aren’t viable yet. That’s something government can do. We need both working together – the clear eye of government and the invisible hand of the market.   

“It’s a daunting challenge. A complex challenge. The CCC estimates it’s going to take 2.7 trillion pounds more investment between 2021 and 2035 to transition the whole of the global economy.   

“And the longer we leave these harder parts in the UK, the more expensive it’s going to be. The more we’ll be energy insecure – at risk from global uncertainty and market shocks.”   

On the upcoming Autumn Budget, Newton-Smith will say: 

“There’s no doubt next week’s Budget is going to be a big milestone in the journey to transition our economy, to deliver energy security and growth. There’s been a lot of rumours, a lot of speculation – about tax rises, national insurance rises for employers and more. There’s evidence that’s starting to dent confidence. 

“This government has made rapid strides on the investment, the business environment we need to power green growth. It’s taken two steps forward on business confidence: let’s not take one back now.  

“We know the fiscal constraints, the economic backdrop and the tightrope this government is walking. But that only makes it more important to bring business in… to work with us to find the solutions that can keep confidence and investment up.   

“So as we face the crucial second stage in this transition, we can keep ahead in the race for green growth.   

…with clarity on transition planning, in consultation with business  

…with a clear timeline for the Green Finance Strategy.  

…and with a Net Zero Investment Plan, mapped across economic sectors.   

“We cannot afford to step back now.”