“Political risk” damaging UK green investment
Here’s a link to a copy of the letter that a group of the UK’s leading industrialists sent to the Energy Secretary, Ed Davey on 5 October 2012. They employ 17,500 personnel in the UK energy sector, “and see potential for significant further investment to support the UK’s move to a low carbon power generation if the government is able to ensure high levels of confidence”. But, “recent delays and reported disagreements in government ….have caused us to reassess the level of political risk in the UK.” The authors are the Chairs, CEOs or UK Presidents of Siemens, Vestas, Gamesa, Areva, Alstom, Misubishi and Doosan.
Key points in the letter:
- Jobs: “These potential jobs are likely to be across research & development, manufacturing and service facilities, and would support new generation capacity and technology development in the UK. That investment couild provide many tens of thousands of new jobs and help to control consumer bills by lowering the cost of technologies, but is critically dependent on a long term, stable framework.”
- Example: Siemens plans to build a new 700-job plant in Hull to make the world’s largest offshore wind turbines for North Sea power generation. But delays in the future Government support for renewable energy are causing companies to reassess such investments.
- Political risk: “Historically, the UK has benfiteed from being known as a country with low political risk for energy sector investments. Undermining that reputation would have damaging consequences for the scale of future investments in the UK energy sector. It is important to protect that reputation carefully.”
- Binding CO2 target: “A binding 2030 target for power sector decarbonisation would help to reduce the political risk currently associated with long term UK industrial investment.”
As multinationals they refer to the “level of political risk in the UK.” If we ask, What lessons can we learn from our competitors that might reduce this risk? Perhaps politicians can find the answer.