No fewer than three in 10 firms told a new CBI survey that such spending will be “paused or halted entirely” unless the new government acts to cut industry costs dramatically.
In an interview with The Independent, the organisation said bosses’ “hearts and minds” are fully behind the net zero commitment – but “harsh economic reality” is throwing that into jeopardy.
“Cost and cashflow pressures affect the net zero investments they would like to be getting on with – something has to give,” said Matthew Fell, the organisation’s chief policy director.
In a plea for help, the CBI is calling for the Industrial Energy Transformation Fund – a scheme to help firms improve energy efficiency, worth just £315m over seven years – to be beefed up.
Otherwise, investments towards net zero will be delayed until there are “better economic conditions to hit the go button,” The Independent was told.
Ed Miliband MP, the shadow climate change secretary, seized on the CBI call for action as further evidence of “an absentee Conservative government asleep at the wheel”.
“It is intolerable that the Conservatives continue to offer no solutions to this crisis, and oppose Labour’s plans to freeze energy bills this winter, insulate homes, and deliver the clean energy sprint we need,” he said.
The fears are raised when the UK’s commitment to end its contribution to global heating by 2050 is already in deep trouble, according to the independent watchdog the Climate Change Committee.
Its recent report warned of “scant evidence of delivery”, with no policies in place to act on one-third of required emissions reductions in areas including buildings and agriculture.
One senior Conservative MP suggested Tory party members care little about hitting the net zero commitment, “because 90 per cent of them will be dead”.
Now the CBI is revealing the new threat to the net zero target in its survey of almost 600 firms – which found 69 per cent say their energy costs are set to rise, with almost a third fearing increases above 30 per cent.
Its three-point “oven ready” plan would give targeted help to at-risk households and companies and freeze business rates freeze in 2023-24, as well as kick-start the energy efficiency drive.
The CBI said it knew of one manufacturing company that had already halted green investment – faced with a threefold rise in annual energy bills over the past 18 months, from around £700,000 to around £2.4m.
A printing company had paused investment, following a 150 per cent cost increase, while one firm in the glass sector could no longer afford to electrify its processes or switch to greener fuels.
“Energy has gone from one of a basket of costs for the vast majority of businesses to something that’s now looming quite large, so it’s a case of needs must and those choices are coming to the fore,” Mr Fell added.
“There is a risk that vital business investment is paused or halted entirely. That, in turn, could pose a real threat to the UK’s economic recovery and net zero transition.”
There is business frustration that public attention is focused on households contemplating a winter surge in the energy price cap to more than £4,000, while firms are also suffering.
“We can’t afford to lose sight of the fact that many viable businesses are under pressure and could easily tip into distress without action,” Mr Fell said.
Both Ms Truss, the overwhelming favourite to seize the Tory crown on 5 September, and Mr Sunak have been criticised for failing to set out plans for the energy crisis.
Speaking ahead of hustings in Birmingham, Ms Truss insisted she recognised “the problems people face”, but argued: “What I can’t do today is announce a full future Budget.”
She repeated that the “first port of call has to be reducing taxes”, despite criticism they will overwhelmingly benefit the wealthy, having previously criticised “handouts” to the public.
One energy boss said her likely chancellor, business secretary Kwasi Kwarteng, revealed he is considering a state-backed crisis fund to block bill increases – at a cost of up to £100bn.