The voice of the energy industry

Policy before the Bill

Today’s Queen’s Speech has set the legislative agenda for the year ahead. The focus on Net Zero and climate change, skills and improving and protecting the environment is all welcome - but does it go far enough to support the industry in delivering Net Zero and what do we need over the next 12 months?

Following the Energy White Paper and the Prime Minister’s Ten Point Plan for a Green Industrial Revolution published towards the end of last year, Boris Johnson also recently announced the Government would be accepting the 78% target for cutting emissions by 2035 (although not the policy pathway) as advised by the Climate Change Committee (CCC) in the Sixth Carbon Budget. All this shows ambition from the UK Government but we now need the policy to turn intent into action.

That is why the year ahead will be essential in developing and supporting policy and if we get it right, it should lead to a substantial Energy Bill in 2022.

Energy Bill 2022?

The last substantial piece of legislation affecting our sector was the Energy Act 2013. Back in 2013 the Coalition was in government, the Department for Energy and Climate Change still existed, we produced 40% of our electricity from coal while wind only generated 7.7% and low-carbon transport was primarily limited to a wealthy few supplied by niche inventors. Times have changed, and the industry has changed – last year just 1.6% of our electricity generation came from coal and we had a record breaking 68 consecutive coal free days (180 days in total). At the same time renewable energy sources accounted for 43% of electricity generated, with wind power alone supplying a quarter of demand.

But we will need to go even further to achieve Net Zero by 2050 – we know how essential energy is to unlocking decarbonisation in other parts of the economy. We need the next Energy Bill to open opportunities and usher in the next decade of reforms in support of the industry’s Net Zero delivery and to meet the ambitions set out in the Prime Minister’s Ten Point Plan and the Energy White Paper.

Energy UK believes the aims of the next Energy Bill should be to:

  • Modernise the UK energy system to support the UK’s transition to Net Zero
  • Support infrastructure deployment and investment, in a range of low carbon generation technologies including wind (offshore, onshore, floating), nuclear and solar, and by investing in innovative technologies to establish a smart grid.
  • Develop a framework to support and integrate technologies like Carbon Capture, Usage and Storage, hydrogen, energy storage, and data usage.
  • Enable customers to access to a wider range of energy services such as low carbon heating, electric vehicle charging and the wider transition to Net Zero.

Need for policy development

We have 12 months now to develop a Bill that will lead the sector and the country over the next decade towards our Net Zero future. There is a lot to do.

Following the White Paper and the Ten Point Plan, we are now awaiting publication of; the Heat and Buildings Strategy, the Transport Decarbonisation Plan, the Hydrogen Strategy, the Innovation Strategy, the Energy Retail Strategy, the final report of the HM Treasury’s Net Zero Review and the overarching Net Zero Strategy. All of these will be essential in setting out the policy needed to meet the Government’s Net Zero ambitions. The Energy White Paper also set out a number of additional important consultations that are expected this year.

Energy UK and our members are already working with the BEIS and the wider industry to provide support in policy development, including ideas on how to provide reforms of the retail market and what the options could be for hydrogen business models. The constructive way BEIS is going about policy development with the industry is welcome and we hope will continue as we look towards the next Energy Bill.

Need for urgency

Notwithstanding the need for detailed policy development, the fact remains that there is also an urgent need for a Bill to reflect the challenges and opportunities in the sector from working towards Net Zero. Every year without policy and legislative clarity further delays the necessary action and activity as well as the certainty needed to attract long term investment.

It is going to be a challenging year to get the policy development ready for a Bill but Energy UK and our members are ready to work in partnership with the government to support this process. With the aforementioned range of consultations and strategies being published, and the need to then translate that policy into workable legislation, the industry and government are going to be busy, all at the same time as the UK hosts the COP26 negotiations, and getting on with the day job – with, as we’ve seen, the new Parliamentary session starting today. But the size of the prize remains massive for the Government (to show global leadership and ambition), for the industry (opportunities for investment and making a crucial contribution to achieving Net Zero) and for customers (benefitting from improved and innovative new services). 

It is not just the Net Zero target driving us, but the knowledge that as an industry, we can be central to supporting the economic recovery across the UK. Get this right and over the coming decade we will create hundreds of thousands of jobs, attract billions of pounds of investment, and deliver a sustainable energy system fit for a Net Zero UK by 2050.

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