EXCLUSIVE: An industry chief warned the plans are ‘not yet economically viable or practical’ and could help further pressure on struggling firms.
Energy Secretary Ed Miliband (Image: Getty)
Energy Secretary Ed Miliband’s net zero push could backfire on Labour’s 1.5 million new homes pledge, a trade body has warned. The Construction Plant-hire Association (CPA), whose members provide machinery and equipment for projects across the UK, says the sector will struggle to cope with the increased costs linked to decarbonisation.
Industry leaders warn that the additional pressure could weaken the supply chain and undermine Labour’s flagship housebuilding plans and major infrastructure projects. The CPA is calling on the Government to review its net zero plans, warning current targets for the sector are unrealistic and more support is needed. A new survey by the group found 82% of its members believe current policy does not effectively support the industry’s transition to net zero, with chief executive Steven Mulholland saying the shift is putting greater strain on an industry “already under serious pressure”.
The CPA warns net zero plans could weaken the supply chain and hit Labour’s housebuilding ambitions (Image: Getty)
National Insurance hikes, higher operating costs, changes to inheritance tax and a slowdown in construction have all been identified as issues hamstringing plant-hire firms.
UK construction activity fell for a 15th consecutive month in March, new data from S&P Global shows.
More than half (56%) of CPA members say rising energy costs are now the single biggest pressure on their businesses after the Iran war sent oil and gas prices skyrocketing.
The trade body has suggested net zero could be a tipping point for firms after previously warning some were at “breaking point”.
Replacing diesel equipment with hydrogen or electric alternatives requires significantly higher upfront costs and new, pricy infrastructure.
Electric can be two to three times more at the purchase price, while hydrogen is around 50%, according to CPA analysis.
Mr Mulholland told the Express: “Construction activity has been falling, input costs are rising, and confidence remains fragile. At a time when global instability and conflict is already pushing up energy costs, the last thing struggling firms need is additional pressure from policies that are not yet economically viable or practical.
“Plant-hire firms supply the machinery that keeps Britain building. Most of those businesses are SMEs, and they cannot simply absorb the cost of replacing fleets with expensive new equipment before the technology and infrastructure are ready.
“Regulation alone will not deliver this transition. If ministers want construction to support both growth and decarbonisation, they must create a policy framework that supports investment rather than undermining it.”
The Climate Change Committee estimates reaching net zero emissions in the sector could cost around £4 billion a year.
The CPA is calling for incentives to purchase cleaner equipment and greater Government investment in infrastructure.
Other calls include a staggered introduction of net zero rather than blanket targets across all equipment, reducing electricity costs so that cleaner equipment is not more expensive than fossil fuel alternatives and backing domestic alternative fuel supply chains.
It is understood that the Government is preparing to publish its response to a consultation on eligibility for a scheme designed to slash electricity bills for UK businesses.
A Government spokesperson said: “We continue to work with the construction industry to accelerate the rollout of zero emissions plants and vehicles, helping businesses save energy and money.
“Last month we announced a further £1 billion boost for British businesses to deliver zero emission trucks, vans and coaches, and install new chargers at their depots.”