UK Energy Sector's Investment Shift: A Call for Policy Reform

Monday, 26 February 2024

The UK Sustainable Investment and Finance Association (UKSIF) has unveiled concerning insights that a significant proportion of UK energy companies are considering redirecting their investments abroad, driven by the search for more favourable policy environments.

This revelation underscores the urgency for policy reforms within the UK to retain and attract green energy investments. The report, which surveyed decision-makers across the UK energy sector, highlighted that 63% of firms are contemplating or have already moved their investments outside the UK, attributing this shift to the current policy landscape which they find unsupportive of their sustainability goals.

This trend poses a significant risk to the UK's green energy leadership aspirations and its net zero objectives, with a potential loss of ￡115 billion in investments looming if substantial policy reforms are not enacted. A staggering 96% of energy firms expressed their readiness to escalate their sustainable project investments within the UK, contingent upon a supportive policy framework.

UKSIF has pinpointed essential measures that need to be implemented to reverse this trend and bolster the UK's position as a desirable green energy investment hub. These include streamlining planning regulations to expedite the deployment of large energy projects, enhancing grid capacity to shorten connection times, and revising energy pricing mechanisms to incentivise long-term, low-carbon investments.?

Industry leaders have voiced their concerns, emphasising the critical need for investor confidence and an enabling environment to catalyse private sector funding essential for achieving net zero targets. The call to action is clear: practical and cost-effective policy adjustments are imperative to unlock private capital, drive the transition to a green economy, and secure the UK's economic growth and global leadership in green finance.