The voice of the energy industry

Hitting the target: What the Clean Growth Plan needs to tackle

The fifth carbon budget (requiring a reduction in Greenhouse Gas (GHG) emissions of 57% by 2030 across the economy) was agreed by Government in June 2016 - but one year later we are still waiting for the Clean Growth Plan from Government, which will set out how we are going to meet these ambitious targets.

For the UK to deliver on its climate change targets action is needed across the economy. This means reducing emissions in how we generate electricity, heat our spaces, and power our transport. These are significant challenges that will require major investment and long term planning. However, the Government has so far failed to set out its plan on how it will approach each of these areas.

Despite the policy hiatus, progress is being made, especially in the power sector with CO2 emissions falling by 19% between 2015 and 2016 and a fall of 54% compared to 1990 levels. To put this into context, whilst we have been waiting for the Government publication, on 21st April 2017 we had our first day  entirely without power generated from coal since the industrial revolution. 

The challenges for further decarbonisation of the power sector will become tougher as we integrate a greater proportion of renewable energy sources that are intermittent by nature (this means they only generate electricity when the wind is blowing or the sun is shining for example). The UK already has over 900,000 solar PV installations – up 12,000% from 8,000 in March 2010 - which are making a significant contribution to the power sector. Solar, combined with increasing levels of wind, biomass and other renewables, will play a major role going forwards. Renewable energy should now be viewed as business as usual from a generation viewpoint.

Going forward, there will be a need to couple these intermittent forms of renewable generation with greater levels of storage (battery or other forms), an area that requires additional investment to develop to the necessary capability. Another option is to consider potentially lower carbon fossil fuel generation that would need to be combined with Carbon Capture and Storage (CCS). However Carbon Capture and Storage development has stalled since the Government cut the funding for it in 2015. A future strategy should consider the role of CCS given its role in decarbonising power generation and also the production of hydrogen as a low carbon gas.

It will be important for the Government in its response to the Committee on Climate Change that it sets out how it intends to adapt to the changing power sector. Energy UK has been clear, that with a stable and more predictable policy framework, the sector will deliver the £180bn of investment required to keep pace and drive forward this transition. However, it needs Government to play its role in setting a long term strategic plan that provides the path to a decarbonised economy. Energy UK will be publishing a paper in the coming weeks on the steps that are required to deliver this investment at the lowest cost to customers. 

A potentially bigger challenge for the Government will be how it approaches decarbonising the heat and transport sectors. The Committee on Climate Change in its ‘Progress report to Parliament’ stressed that “although good progress has been made to date, that progress is stalling. Since 2012, emissions reductions have been largely confined to the power sector, whilst emissions from transport and building stock are rising”. 

There has been a recent surge in the uptake of electric vehicles due to their environmental credentials and also as they become more economically viable. With over 105,000 electric vehicles on UK roads in July 2017, approximately 600 million UK vehicle miles per year are now powered by electricity. Recent research has shown that the increasingly decarbonised energy supply has resulted in fuel for electric vehicles being even cleaner than before, using around half the CO2 of the cleanest non-electric car available . The Government’s ambition to ban the sale of petrol and diesel cars in the UK by 2040 means that collaborative working is now even more vital to meeting our shared goals for the UK, but, with the right framework from Government and a collaborative approach from industry, there is scope to go much further and faster.

There will be implications for the electricity grid that we do not yet understand from a mass roll-out of electric transport. Whilst we note that this will undoubtedly create challenges, a recent report  from Energy UK set out a range of benefits from electric vehicles that will play an important role in providing energy flexibility services to the electricity grid as these vehicles double up as a mobile battery resource. A mass uptake of electric vehicles could provide the energy system with additional tools, through battery storage capability, to help manage the system at lowest cost for consumers and potentially be part of the solution for managing intermittent generation. 

There is much interest surrounding electric vehicles, and there are going to be challenges for their deployment, including ensuring that there is enough generation capacity and that the local power grid is robust  in order to cope with mass uptake. However, the sector is confident that working smartly it can help deliver the transition to a more electrified transport system. It is vital that we have an enabling regulatory framework which balances the need for long-term certainty with the need to leave sufficient space to innovate.
Whilst power and transport are offering signs of progress, an area where the UK urgently requires innovation is with regards to how we heat and cool our spaces. Almost a fifth of our carbon emissions are from the building sector and if we are to meet our carbon reduction targets this must be tackled - we must move away from fossil fuel based heating. Due to the nature of this challenge, there is no silver bullet and we are going to need a range of solutions. For the majority of properties, this will mean replacing or adapting gas-fired boilers to use a lower carbon fuel source. This is likely to mean hydrogen or bio gases. The challenge will be significant as households have to convert heating and cooking appliances. 

Government must decide what fuel source will be used in the future and start introducing product standards that allow this transformation in the future. The UK needs to start trialling and supporting technologies for the future as the deployment of low-carbon heat cannot wait until the 2030s or the Government will miss its legally binding targets. Low-regret opportunities exist for heat pumps to be installed in homes that are off the gas grid, to install low-carbon heat networks in heat-dense areas (e.g. cities) and to increase volumes of biomethane injection into the gas grid. 

Just as importantly as meeting the challenges of how we heat our buildings, we must ensure that we make our homes and workspaces more energy efficient. The UK’s building stocks are amongst the most energy inefficient in Europe. Energy UK believe that energy efficiency should become a national infrastructure priority led by Government and funded via general taxation. Energy efficiency is key to helping to address both climate change targets and fuel poverty and so we see this as a core requirement in the forthcoming Clean Growth Plan. This should begin with new-build homes, where it is easier and cheaper to install energy efficiency measures into the fabric of the building.

Energy UK’s members are committed to supporting and delivering the transition to a low carbon future at lowest cost to customers. As an industry we will continue to show leadership and innovation.  There is no time to delay and as a sector we are determined to show how this transition can be achieved. Over the next six months, we will be publishing a series of reports on how we, as an industry, believe that the transition to a lower carbon future can be achieved following the publication of the Clean Growth Plan. These will form part of our “Pathways to 2030” series, following up on our report published last year.


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