2023 policy review: what were the key announcements for businesses this year?

It has been a major year for the energy sector, particularly when it comes to announcements from Westminster.

It has been the year when energy has become a mainstream focus, with the volatility in the wholesale energy markets demanding action at government level to reduce invoices and provide energy stability, all while keeping our net zero ambitions on track.

Here, I outline five of the main developments this year, and what these mean for UK businesses.

If one move from Westminster highlighted the importance of energy at the highest level, it was the creation of a dedicated department - the Department for Energy Security and Net Zero (DESNZ). At the time, I said that:

“The past two years in particular have highlighted the need for specific governmental focus on both energy and net zero, so a secure and sustainable policy framework can be built that supports both businesses and consumers.” 

This is something that still stands. While several new policies, initiatives and consultations have been published this year, arguably more can still be done, particularly when it comes to support for businesses to help them invest in measures such as energy efficiency.

In March 2023, we published our second Business Energy Tracker, just before the government’s Energy Bill Relief Scheme (EBRS) was replaced by the Energy Bills Discount Scheme (EBDS). Our research showed that two thirds (67%) of businesses felt that the EBDS wouldn’t go far enough to support them, a view which was supported by Third Party Intermediaries (TPIs) when we added their views in a new TPI version of the Business Energy Tracker, which was published earlier this month.

With wholesale energy prices remaining unstable, it remains to be seen whether there will be any further support for business energy invoices when the EBDS ends on 31 March 2024.

In a day labelled ‘Green Day’ at the end of March 2023, DESNZ published ‘Powering Up Britain’, which included the Energy Security Plan and Net Zero Growth Plan. It included measures to accelerate some of the technologies, including hydrogen and carbon capture utilisation and storage (CCUS), that will help the UK’s more energy intensive industries to decarbonise. It also proposed streamlining planning rules to increase the deployment of low-carbon sources of power such as solar photovoltaic (PV) and wind, as well as announcing an extension to the Industrial Energy Transformation Fund (IETF).

Many of these measures were taken further in the subsequent Energy Act and Autumn Statement, but, as we’ve said previously, additional energy efficiency incentives for business were notably absent.

4. Net zero roll backs

Nine months after the publication of the Net Zero Review and six months after the publication of the Net Zero Growth Plan, in September, the Prime Minister announced changes to some of the UK’s net zero policies, including delaying the ban of the sale of new petrol and diesel cars by five years. 

We know that, despite the recent challenging economic climate and volatility in the wholesale energy markets, a huge number of businesses are committed to net zero. They recognise that an informed approach to sustainability not only helps them lower carbon, but also mitigates energy risk.

However, they need certainty to give them the confidence to invest in the necessary measures to decarbonise their operations. Watering down short-term targets will lower confidence that the long-term ambition is achievable. Put simply, if businesses don’t invest, then net zero won’t be possible.

The UK government called the Energy Act ‘the biggest piece of energy legislation in the UK’s history’ and it was certainly long overdue. There has been huge change in the sector, particularly in terms of the development and deployment of renewables, so we needed a piece of legislation that accurately reflected our energy needs both today and in the future.

While it will increase some certainty around some of the critical technologies to deliver a more stable, sustainable and lower cost energy system, businesses still need to see more action from the government to help them invest in measures to reduce energy demand. The Energy Act is a major step forward, but for business energy users, it only tells part of the story.

Looking towards 2024

With 2024 looking likely to be a General Election year, it is also likely that energy and net zero will be a major focus of attention for all political parties. I wrote previously that it is important that a General Election does not delay energy security and net zero progress.

It is also important that any future energy and net zero policy is pro-business to give them the confidence to invest. While some of the measures in the recent Autumn Statement are designed to support business growth, there is a real opportunity for political parties to go even further and introduce pro-business policy that supports the important contribution businesses will make to both energy security and net zero in the crucial years to come.