The IOD survey reveals overwhelming support for clean energy, and yet the group's focus seems to fixed on support for fossil fuels
This is a story of how opposition to decarbonisation and clean energy efforts is fuelled, inadvertently or otherwise, even when the evidence points to widespread support for clean technologies and climate action.
Yesterday, the Institute of Directors put out an embargoed press release under the blaring headline ‘Governments of all stripes have failed on energy, say business leaders'.
"Successive governments since the beginning of the century have failed to deliver secure and competitively-priced energy, a damning new survey of business leaders reveals today," the press release continued. "A poll of nearly 1,000 bosses by the Institute of Directors found that seven in ten thought Labour, Coalition and Conservative administrations had all failed to make energy available at a reasonable cost. Two-thirds also complained politicians had not succeeded in ensuring the UK would always have the power it needs."
Full frontal assault on successive governments' records established, the missive then went on to acknowledge that directors think Ministers had been "more successful in increasing the use of renewable sources (59 per cent agreed) and reducing carbon emissions (45 per cent), since British politicians first pivoted in this direction shortly after the turn of the millennium". Who was responsible for this pivot? "In 2002, the Labour Government under Tony Blair launched a review of energy policy that led to the first targets to cut CO2 and has set the tone for policy-makers since," the press release reminds us.
In two short paragraphs the IOD's central message is established: UK energy policy has "failed" even if, and perhaps because, the (Blairite) "pivot" towards renewables and emissions reduction has succeeded.
If you doubt this not-so-coded message, Dan Lewis, senior infrastructure policy adviser at the IoD, was on hand to explain the significance of the survey results. "Since the early 2000s, government of all stripes have focused on increasing use of renewable energy in order to reduce carbon emissions," he was quoted as saying. "Cutting CO2 is overwhelmingly supported by business, but politicians have underplayed the other two crucial aims of energy policy, delivering secure and affordable power. Following the creation of the new business and energy department, now is the ideal moment for the government to reconsider the direction of travel."
So the IOD wants a new direction of travel that continues to cut emissions, but which no longer ‘underplays' energy security and ‘affordable' power. But what would such a policy framework look like? How do you cut emissions, costs, and energy insecurity? After all, that is what everybody wants.
Thankfully, Lewis is on hand again to offer some pointers. "Renewables are a significant, and growing, source of energy," he observes, quite rightly. "The UK has the world's highest offshore wind capacity, with much more expected. But technology based on the weather doesn't work all of the time, so the UK needs a mix of renewables, nuclear, and the cleanest hydrocarbons."
And there we have it. The call from the IOD is for a rethink of UK energy policy so a more affordable and secure mix of different energy sources is delivered, including ‘the cleanest hydrocarbons'. The IOD has been around the media block enough times to know the intervention is highly likely to be interpreted as a demand for increased investment in gas first and foremost, with a few pot-shots about renewables thrown in for good measure.
Just in case you have failed to reach the conclusion this intervention is primarily about gas, Lewis gilds the lily by highlighting some of the "bizarre outcomes" of current energy policy. "Instead of accelerating moves to safely frack for gas and oil in the UK, we are importing coal and oil from Russia and gas and oil from Norway, with the extra costs and emissions that involves," he says. "Instead of building cleaner gas plants to meet demand when renewables can't, the government has been subsidising more polluting diesel-fired plants."
As Lewis explained when I spoke to him yesterday afternoon, in tackling the "energy trilemma" it looks like we have only been successful in one of the three goals. Obviously, the latest climate science warnings and the fact we are not currently on track to meet the fourth carbon budget would suggest we have enjoyed the most partial of success against our sustainability goals, but that appears to be beside the point. Lewis continues by again stressing the IOD's support for decarbonisation and renewables, while reiterating that more gas baseload is desperately needed to alleviate concerns about energy security. "Members support decarbonisation and renewables, but they do also say energy security and cost are concerns," he says. "So renewed focus on those two is important, most likely with gas and nuclear, and need not come at the expense of renewables."
There is support for this approach amongst IOD members, the press release suggests, highlighting how businesses want a broad mix of sources in the UK energy mix. "A majority supported all mainstream forms of renewable power generation, although the most popular, wave and tidal, is still largely untested in the UK," it claims. "Over half of IoD members also back hydraulic fracturing (known as fracking) of shale rock for oil and gas." Got that? A majority like renewables, even if the key technology is ‘untested', while over half back fracking.
Everything in the press release is accurate and the points raised by Lewis are fair enough. He highlights very real and long-standing business concerns about energy security and affordability, while still acknowledging the importance of decarbonisation.
But the risk is obvious and predictable. ‘Business wants energy security and cheaper bills above all else,' certain columnists and media outlets will argue, even though the survey does not, in fact, say this. ‘That means they want much more gas and an end to costly renewables that don't work anyway.' At which point the IOD will clutch its pearls and quietly whisper, ‘that's not exactly what we want, we want renewables too'. But too late, the fossil fuel loving horse will have bolted.
Meanwhile, those who look closer at both current government energy policy and the full IOD survey results will reach a very different conclusion about the energy preferences and concerns of many within the business community.
The first thing to note it pretty much everything the IOD is calling for is exactly what the current government is aiming to deliver. Last year former energy and climate change secretary Amber Rudd argued there should be more focus on energy affordability and security, fuelling concerns this would herald less focus on energy sustainability. The government is already "accelerating moves to safely frack for gas and oil", just as it is taking steps to tackle the scandal that is subsidies for diesel power stations. Ministers are pursuing a mix of gas, renewables, and nuclear in order to address energy security concerns while still cutting emissions. Energy security and affordability may or may not have been underplayed, but the last government did move to curb ‘green levies', introduced a capacity market to address energy security fears, averted blackouts, and introduced big exemptions from various ‘green' costs for industrial firms. Governments may have a very mixed record on energy, but they have not exactly been blind to the complex issues unleashed by the global necessity of building a clean energy system.
Secondly, the picture the IOD paints offers only part of the story about its membership's views on decarbonisation. How do we know this? Because, in fairness to the IOD, it also published the full results of the survey. They are much more interesting than the press release suggests and raise very real questions about the relative levels of support amongst business leaders for different energy technologies.
Take the question on decarbonisation for example, which was not highlighted in the press release. "To what extent do you agree or disagree that the UK needs to decarbonise its energy use to mitigate the effects of climate change?" IOD members were asked. Over 36 per cent strongly agree and 38 per cent somewhat agree, while just eight per cent somewhat disagree and seven per cent strongly disagree. Think about that for a second. Three quarters of the membership of one of the UK's most conservative business groups agree the UK ‘needs' to decarbonise its energy supplies. And yet plenty of influential politicians and opinion-formers continue to operate under the misapprehension the business community is opposed to emission reduction efforts.
The relative levels of support for renewables and fracking are similarly informative. The IOD press release implied they are comparable and offered a helpful reminder about the maturity of certain renewables technologies. In reality, 56 per cent of IOD members support fracking and 28 per cent oppose (a result the government and fracking industry will welcome given public opposition continues to comfortably outstrip support), but business support for renewables is another league altogether. Over 87 per cent support "increased deployment" of solar and wave and tidal power, over 78 per cent want more offshore wind, and 67 per cent support more biomass power. Opposition to each of these technologies is negligible.
The only renewable energy technology with comparable levels of support and opposition to fracking is onshore wind. Just over 55 per cent of IOD members want more onshore wind and 34 per cent oppose it. And yet while the government continues to try and fast-track fracking projects citing the needs of business, new onshore wind farms that enjoy precisely the same level of business support have been effectively blocked.
Again, take a moment to think about those results. Against a backdrop where large swathes of the media, including a sizeable chunk of the business press, have attacked renewables over their cost and efficacy a vast majority of business leaders at one of the UK's more conservative business groups want increased deployment of renewables. Had the IOD chosen a different angle this could just have easily been a story about business leaders attacking the government for slowing the deployment of onshore wind, solar, and biomass, rather than a story about energy security, affordability, and fracking.
The remarkably high levels of support for decarbonisation and renewables amongst IOD members is worth considering in the context of the questions the IOD did choose to focus on in its press release.
Respondents were asked whether they "agree or disagree that British energy policy since 2002 has been successful in increasing renewables, reducing carbon and delivering secure, competitively priced energy to your business?" Over 58 per cent agreed it had succeeded at increasing renewables, but only 45 per cent thought it had been successful at reducing carbon and just 14 per cent and 10 per cent respectively thought it had succeeded at delivering energy security and competitively priced energy.
Looking at the raw numbers it seems fair for the IOD to suggest energy policy has "failed" - it has even arguably failed on decarbonisation where only a minority think the government has succeeded in delivering sufficient emissions reduction. But this criticism of the government's energy security and affordability record has to be considered alongside the extremely high levels of support for continued decarbonisation and renewables. Business leaders are intelligent enough to know that investment in renewables and emissions reduction comes up with upfront cost considerations and intermittency issues, but they still want more of it.
The survey shows business leaders think two of the three (arguably three of the three) components of the energy trilemma have not been adequately addressed since 2002, but it does not attribute how much value they assign to each of these components. Most businesses would always like to see lower cost energy and greater energy security, who wouldn't? But improved energy supply margins will come at a cost, as will the initial investment decarbonisation that three quarters of IOD members also want. Some businesses may well think the government has not enjoyed success in delivering lower cost energy and higher levels of energy security, but they may also think some of this downside is worth it for the upside offered by a cleaner energy system. On their own the survey results do not tell us whether or not this is the case.
Perhaps I'm over-interpreting things, but the framing of the IOD announcement appears to gloss over these concerns, instead focusing on energy security and affordability in a way that aims thinly veiled criticism at renewables while also bigging up fracking and gas in a way that avoids legitimate concerns about the risk of locking in high carbon infrastructure.
The IOD will continue to argue, with considerable justification, that it is advocating an all-of-the-above energy strategy (less coal) that can bolster energy security and affordability while still delivering decarbonisation. But the way it has presented its survey results will only help to ensure those who want UK energy policy to focus almost entirely on fossil fuels at the expense of clean energy alternatives conclude they have an ally in IOD members, even when the survey results suggest the exact opposite.
UK energy policy is far from perfect and business concerns about energy affordability and security need to be addressed. But they are already being addressed through various tax exemptions, energy efficiency measures, and new investment in clean energy. And they can continue to be addressed through investment in increasingly cost effective renewables, smart grids and energy storage, further energy efficiency, and perhaps new nuclear and carbon capture and storage. In contrast, excessive investment in new fossil fuel infrastructure risks undermining the decarbonisation efforts that a vast majority of business leaders regard as essential.
UK energy policy has arguably failed since the turn of the century, but the IOD survey suggests part of the failure has been an inability to deliver deeper decarbonisation and more investment in wildly popular renewables.
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