Zero Carbon UK

Renewables provided a record 37.1% of the UK’s electricity last year, and prospects for continued growth look good, with renewables taking over in many sectors, but there will also be a need to push carbon based energy out of even more markets. An independent ‘Zero Carbon Commission’ was set up in February 2020 to review the UK emissions pricing landscape, and explore how it might be re-designed to be consistent with the UK's 'net zero' carbon target. Members include Lord Adair Turner, UCL Prof. Paul Ekins and Baroness Bryony Worthington.                           

In an interim report, based on an initial review and public opinion survey, the Commission propose ‘a phased, sectoral approach to carbon charging to help fund a fair, green transition towards net zero’. It says that, under this plan, ‘by 2025, there would be a simple carbon charge of £55/tCOe (carbon dioxide and equivalents) on greenhouse gas emissions across much of the economy, rising to £75/tCOe by 2030’ although ‘surface transport would continue to be covered by existing price signals, which are expected to be strong enough when supported by other policy levers.’ 

The carbon tax ‘would raise revenue for environmental transformation, provide funds to cushion the most vulnerable households from cost increases, and contribute to core government spending in a way that also incentivises consumer & business behaviour. It would ease the duplication and bureaucratic burden of current carbon taxation, and create clearer decarbonisation incentives’. 

The Commission claims that its carbon tax proposal ‘is fair - asking those who do the most damage to pay for it. It changes everyone’s behaviour - from multinational corporations to individuals. It allows every one flexibility in choosing how to shift to a net-zero world, and gives confidence to investors to support the development of low-carbon technologies’. 

Well maybe, though it is easier to tax and regulate the few big producers than the many consumers- and that also avoids double taxing of the same energy. 

White Paper 

We may see some action on this suggested in the long awaited Energy White Paper, which Kwasi Kwarteng MP, Minister for Energy and Clean Growth at BEIS, says will be out ‘later this year’. He told the online meeting of the All Party Parliamentary Net Zero Group that he regretted that the White Paper had not been published as planned last summer, but said now the Covid-19 slowdown placed even more focus on the importance of an economic recovery that was ‘clean and resilient’, with green power ‘front and central’. 

The White Paper certainly has been a long time coming! Sir John Armitt, chair of the National Infrastructure Commission (NIC), has expressed frustration over that: ‘We’ve been due an energy white paper for quite a long time. I don’t get the sense there’s a lot of activity. There may be behind the scenes but it’s not very visible’. 

Although Covid 19 had obviously intervened, he was also worried about the governments slow action on developing the plan for energy: ‘As each six-month period goes by; it’s another six months off the period for some of the big challenges such as heat, where we had target dates for being able to make decisions around hydrogen for example around 2023, and we’re still some distance from really getting moving on that challenge, without stronger leadership from government. And of course, they’ve set out two dates for decisions on carbon capture and storage projects, one 2025 and the other one 2030. I would argue that’s too far away.’  He added ‘If you put off these long terms decisions, then you have to be prepared for the consequence and risk on not being able to achieve my zero carbon objectives. You have to ask yourself what you really value.’ 

Nuclear power was a case in point. He said ‘The energy mix still remains the big challenge. We can see that at the moment the government has a policy, which is some 10 years old, involving a reliance on nuclear. But arguably it’s a policy which at the moment would appear to be undeliverable, because the basis of the investment by any potential nuclear investor requires the government to take some of the risk, and they haven’t in the last two or three years been able to reach a conclusion on how that might be handled.’ While he was happy to see one more new plant being added, the window of opportunity may be closing: So he said ‘if I was in the nuclear investment lobby, I would be saying to government: ‘Look, even if you just take the minimum forecast of the NIC, which says order one more before 2025, can we not reach an agreement on how we might do that?’

Well maybe. You could say a delay might allow us to see what was needed a bit more clearly, but equally the already uncertain prospects for new nuclear do seem to be worsening, with Hitachi now also bowing out,  so perhaps its already too late – unless the nuclear industry comes up with a new technology!  However, although the government has just allocated £40m for Advanced Modular Reactor R&D, it is far from clear what the future will be for nuclear: see my next post. The government has also been providing support for other bits and pieces: £120 million for developing hydrogen ‘as an alternative to fossil fuels in heating, transport and industry’, and £800 million for the CCSU programme for industrial emission reduction.  And more substantially, £2 billion for the new Green Homes grant scheme, as part of the Covid recovery programme. 

Some of that is sensible, but to get emissions down, we need a lot more, including more focused on accelerating renewable supply. RenewableUK says if the Government lifted the capacity caps from the next round of contracts for difference auctions (due next year) then renewables could secure £20bn of investment and, as Scottish Power argued, given the recent falls in costs, this would not push up prices.  The NIC felt similarly. Armitt talked of renewables getting to 65% of power by 2030 and said the cost falls ‘suggest we can afford to go further, faster without hitting consumers in the pocket.’ But don’t expect the Global Warming Policy Foundation to agree- they say renewable costs have risen!