Written submission from the ETI to the House of Lords Economic Affairs Committee inquiry into the ?Economics of UK Energy Policy?.
Energy is a large component of GDP, and fundamental change in our energy sector is required by the challenge of decarbonisation. This makes energy policy over the next decade vital to long term UK economic performance and productivity.
A key challenge for energy policy is to move towards a more coherent framework to incentivise emissions reductions across the economy. A stronger whole systems perspective should inform policy choices and the allocation of policy support or subsidies.
More policy attention will be needed in the decade ahead on the challenges of decarbonising energy for heat and transport.
Energy policy needs to support UK capability in deploying a portfolio of the key low carbon energy technologies that offer most potential value to UK decarbonisation. This portfolio includes carbon capture and storage (CCS), a range of bioenergy technologies (including advanced gasification), new nuclear (large and small modular reactors), gaseous systems (including hydrogen), low carbon vehicles and supporting infrastructure, energy efficient buildings and low carbon heat options (including heat networks) and offshore wind. Targeted policy interventions may be required to address specific market failures that currently inhibit the development of these technologies.
New governance and regulatory arrangements that go beyond current sector-specific frameworks should be considered to enable efficient investment in transforming energy infrastructures.
Addressing issues around the burden of high energy bills will depend on delivering improvements in home energy efficiency and control over energy use for consumers, as well as changes in retail energy pricing structures.