CBI demands an overhaul of Britain's energy policy

Business leaders are calling for a major shift in the Government's energy policy to avoid a dirty and dangerous reliance on foreign-sourced gas in two decades' time.

The current approach is both jeopardising the achievement of climate change targets and undermining future energy security, says a Confederation of British Industry report published today, just days before the launch of the Government's Renewable Energy Strategy (RES).

Incentives focused on ramping up wind power will draw investment away from other low-carbon energy sources such as nuclear and clean coal, the report warns. And the need to keep the lights on will force utilities to build extra gas power stations to fill the short-term gap left by the decommissioning, from 201 5, of ageing infrastructure. The result, according to consultants at McKinsey, is that by 2030 the UK energy mix will be unduly reliant on imported gas and not in line with carbon emissions reduction targets.

To be sure of a more balanced mix of energy sources, the Government needs to cut its 2020 renewable target from 32 per cent to 25 per cent, push ahead with plans for nuclear energy and carbon capture and storage (CCS), and accelerate grid upgrades. And there is no time to waste because investment decisions made now will set the energy balance for decades to come.

John Cridland, the deputy director general of the CBI, said: "The RES is the last-chance saloon to get the UK on a sustainable energy path. Our concern is that the current path for investment will leave us with a mix that is not sufficiently de-carbonised and not sufficiently secure."

The alternative suggested by the CBI sees a 2030 energy mix with 83 per cent from green sources – including 34 per cent from nuclear, 20 per cent from wind and 14 per cent from clean coal – compared with only 64 per cent green energy in the "business as usual" scenario, where 20 per cent is nuclear, 24 per cent wind and 8 per cent clean coal. Changing the balance will not cost more than the £150bn investment already predicted. Although it will require more reactors, they can fit on existing nuclear development sites.

The RES, due to be published on Wednesday, will set out how the UK will meet the target to produce 15 per cent of its energy from renewable sources – which equates to more than 30 per cent of electricity – by 2020. It is expected to include strategies for meeting delays in the planning system and upgrades to the National Grid.

So far, short-term progress is not promising. At a local level, most English regions are not likely to meet their interim targets for renewables, the British Wind Energy Association (BWEA) will say today. Just half of the plan envisaging more than 4,500 megawatts of capacity has been installed. And only London, which represents just 2 per cent of the total, is on track for 2010. Alongside the capital, the best-performing regions so far are the East Midlands and the South-east. At the bottom of the league are the North-west, East and South-west.

The BWEA says what is lacking is the political will to succeed. The top priority is to improve the planning system. Despite a target of 16 weeks per application, in reality wind-farm bids take an average of 14 months.

The regional survey's findings highlight a more serious debate around the division of power between central and local government, says the BWEA. Although the targets are set at Westminster, planning decisions rest with Local Planning Authorities. Even the creation of the new Central Infrastructure Authority this year will only take on the biggest projects, when the majority of on-shore wind farms are below the threshold. As long as LPAs are making decisions, influenced by a "not in my back yard" culture, progress towards the targets will be slow, it says.