ENERGY AND POWER | IN FOCUS
FUELLING ECONOMIC GROWTH
ENERGY AND POWER
Energy is the lifeblood of business, so access to cheap sources of electricity and power is essential for economic growth. In the meantime rising energy costs mean firms must constantly seek alternative sources and find ways to cut their energy needs.
A major development in the supply of energy to the UK came in 1965 – the same year that the CBI was established. The UK Continental Shelf Act had come into force in May 1964 and the following year saw the first discoveries of gas in the West Sole Field and the Viking Gas Field. Initially, uptake was hampered by regulatory
and market difficulties and the major breakthrough did not come until 1968 when Phillips Petroleum discovered oil in the central North Sea and in 1970 when the giant Forties, Piper, Frigg and Brent oilfields were discovered. The North Sea was open for business. According to the offshore industry, 42 billion
“barrels of oil equivalent” have been extracted on the UK continental shelf over the subsequent four decades. Oil and gas production from the UK sector of the North Sea peaked in 1999 and is now in slow but steady decline. However, it is still a major
Opposite and right: Coal is still the UK’s largest source of electricity, but we have a played a key role in the development of alternatives such as wind
source of export and taxation income, boosting the UK’s balance of payments by £32 billion in 2012 and generating £6.5 billion in tax revenue in 2012/13.
NUCLEAR POWER This trend has highlighted the need for the UK to set out a long-term framework for energy that ensures energy costs remain affordable for business while taking account of the need to meet ambitious targets for reducing carbon emissions. Gas plays a crucial role in supplying our heat
and electricity needs, having been the largest single source of energy in the UK since 1996 and meeting more than a quarter of our energy demand. As well as supplying gas-powered electricity generating stations, it is also the main way we heat our homes, office buildings and industry. More than a third of electricity comes from
coal-burning power stations. However, a third of these power stations are expected to close by 2016 so the UK meets EU air-quality legislation. Since the shrinking of the UK coal mining industry in the wake of the 1984/85 miners’ strike the UK has imported coal and, indeed, overseas supplies provided 79 per cent of the coal used for electricity generation in 2009. The arrival of nuclear power in the UK also
tracks the life of the CBI. Calder Hall was the first nuclear power station in the world to supply electricity on a commercial basis in 1956 although
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it was used for military-grade plutonium. The first prototype reactor was rolled out at Dounreay, at the northern tip of Scotland, in the 1960s. The UK has 16 reactors generating about 18 per cent of its electricity and all but one or two, depending on regulatory approval, of these will be retired by 2023. The government aims to have the first of a new stream of reactors on line by 2023. In 2012, 363 billion kWh (TWh) of electricity
was produced in UK. This was made up of: • 70 TWh (19 per cent) nuclear • 100 TWh (27.5 per cent) from gas • 144 TWh (40 per cent) from coal • 19.4 TWh from wind • 8 TWh from hydro • 17 TWh from biofuels and wastes. »
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