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How will the Energy crisis affect your business and strategy?

The publication of the UK Government’s Energy Security Strategy was made in the early part of April 2022. Anticipation for the report was high after such a turbulent time of late along with the pressures on supply chain culminating in price increases. However, on top of all this, the energy crisis is starting to bite with little help from the government to support the manufacturing and SME sector.

Having read the publication, business needs a sustained commitment from government to make the objectives defined within this strategy to convert to reality.

However, while the attempt to address the supply challenge is important and necessary, the Energy Security Strategy missed an opportunity to target demand reduction, specifically energy efficiency that enables ‘doing more with less’.

As it stands, the way in which we live and do business in the UK means that our demand for fossil fuels, sourced from both home and abroad continues apace. Oil and gas are still enmeshed across our supply chains and, with the volatility we have seen in prices, this leads to serious impacts for the cost of living and doing business across our whole economy. Domestic heating, and the impacts already seen from the energy crisis on the ability of people to heat their homes, is just one such example.

This is something that could have helped to increase energy security and deliver a range of wider societal and economic benefits. Business leaders want two things from a national energy security policy.

🟢 Firstly, they want price stability so that they can plan and stratergise their operations. We have all seen how disruptive instability can be of late and the cost of energy can only have a further negative impact on business.

I certainly welcome the Energy Security Strategy’s commitment to greater independence from international markets. I am also concerned that the measures announced will do little to help businesses facing high energy costs in the immediate future. How do small businesses counter act this from an already state of trauma post Brexit and Pandemic times?

🟢 Secondly, business leaders need confidence that the government policy is sufficient to meet our UK’s net zero goals. The economic case for commitment to, and investment in, sustainable energy production and energy efficiency has never been stronger.

The government’s commitment to low carbon energy production is therefore welcome, but greater ambition and leadership is required to rapidly increase renewable energy production.

But the fundamental question – which is critical to the UK’s long-term energy security and that the Strategy fails to adequately grapple with, is how do we reduce our demand for fossil fuels, at scale and rapidly, in ways that are affordable and that operate within the constraints of a global environment that cannot withstand much further warming?

It is also important that SMEs are given greater incentives, guidance and support from government to help them invest in measures to become more energy resilient and energy efficient which, to date, has been a huge gap in the government’s climate change strategy.

Crucially, once efficiency measures have been installed across sectors, it will enable businesses, supply chains and people to become more resilient to cost and price pressures. It also offers opportunities for the UK to gain competitive advantage in delivering the kind of low carbon goods, services and technologies that all nations in the world will need going forward.

Overall, with no new measures to help reduce consumption or counter the current market volatility, the Strategy does little to help businesses address the short-term issues they are facing right now.

The Energy Security Strategy – A positive step in the right direction or a missed opportunity to reduce energy demand and increase energy resilience?

I’ll leave you to make your own mind up………..

 

Published by

Mark Stewart

Supporting plastic manufacturers with bespoke polymer and colour solutions
Managing Director | Polyblend UK LTD

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