29/06/2017 – News / Environment / Climate Change / UK / Decarbonisation

Opinion: Much progress will be required to decarbonise UK economy

The UK’s Committee on Climate Change – an independent advisory to the government – has once again reported a fall in emissions, largely due to a reduction in coal and an increase in renewable generation in the power sector. However, the Committee has made it clear that if the UK is to achieve future targets, significant progress needs to be made in decarbonising other sectors. Oliver Rix, Partner at independent business and technology consultancy Baringa Partners, responds to the Committee on Climate Change’s Progress Report.

 

Nearly a year after the 5th Carbon Budget was enshrined in law, we are still awaiting the publication of the Emission Reduction Plan, which will play a key role in setting out how the Government plans to do this.

 

The Government’s focus needs to be on the future policy to drive decarbonisation across all sectors. Unfortunately, other priorities – in particular, Brexit – are likely to take up significant time and effort from experienced analytical and policy-making talent from within the Civil Service, especially as people are re-deployed to DExEU. This means the Government may not have the capacity, as it sorts through the mountain of policies and regulation untangling needed for Brexit, to tackle important but 'under the radar' policies that could make a significant difference such as vehicle and product efficiency standards and the labelling of appliances.

 

The Government needs to maintain the emission reduction progress that has been made to date. Decarbonisation actions in the buildings and transport sectors will require an increased focus on the consumer proposition and the design of policy that delivers benefits to both the consumer and the system. It should also recognise the broader links between decarbonisation and wider issues such as health and affordability. These issues can provide further incentive to take action, such as a move to electric vehicles, which would improve air quality and reduce the negative impacts of air pollution.

 

Carbon capture and storage (CCS)

 

There has been no progress made in the development of CCS since the unexpected cancellation of the second competition [in January 2017]. This is despite the fact that it is a key decarbonisation technology, with potential applications in the power sector and across industry for hydrogen production and to create negative emissions when used in combination with biomass.

 

The UK has significant potential for CCS development, building on its mature offshore industry and its substantial geological storage resource. However, the path for CCS in the UK remains uncertain. It's clear that the Government will need to play a central role in driving this forward, but the exact scope of this role is yet to be decided. Key lessons from the previous competition need to be learnt, and solutions identified to the challenges facing CCS in the UK, particularly in relation to risk sharing and the role of different parties across the CCS chain (from capture, through transport, to storage).

 

Understanding whether CCS is or is not a part of the future system is massively important in determining what other solutions are required and the Government needs to address this as a matter of priority.

 

Buildings

 

The report shows that emissions from buildings have been rising. The majority of the potential emission reduction associated with boiler upgrades has already been achieved as most domestic gas boilers are now efficient condensing models. The RHI scheme (for renewable heating) has made little progress in deploying lower carbon solutions.

 

Decarbonisation of heating is a difficult issue to solve, as it involves a very large number of individual households, there is a high 'hassle factor', and the building stock of the UK is hugely variable.

 

There are a number of options considered potentially viable including: electrification of heating via use of heat pumps; switching from gas to hydrogen (with the conversion of existing network infrastructure) and installation of a new heat network infrastructure (that can make use of waste heat sources or large-scale centralised renewable heat sources). However, these options are very different and each will have implications for consumers so will require some potentially politically uncomfortable decisions to be made.

 

It is essential that the Government continues to focus on R&D efforts, supporting demonstration projects and related feasibility initiatives so that the viability of solutions can be assessed with sufficient supporting evidence. It is good to see recent news of funding for the ‘Smart Systems and Heat’ programme at Energy Systems Catapult as a part of this.

 

It is likely that the design of long-term heating options will require significant input from local and regional stakeholders in order to find the best and most appropriate solution for any given area.

 

It is clear that consumers will be a key stakeholder in the future of low carbon heating. It is very important that we get the consumer proposition and experience correct by understanding customer preferences and behaviours. But we also need to ensure appropriate regulations are in place to protect consumers of low carbon heat, especially district heating networks (as Ofgem currently does for consumers of gas and electricity).

 

Power

 

The CCC reported that further progress has been made in the phasing out of coal generation and increased output of renewables. However, more policies are needed to deliver low carbon beyond the early 2020s.

 

The absence of subsidy support for mature onshore wind and large-scale solar technologies is unfortunate given the opportunities for these, especially when there may be only a small gap to reach the point when these are cost-competitive without subsidy.

 

There is an opportunity for corporations and businesses to take a role in driving forward future low-cost renewable development through their power sourcing strategies, but there is potentially an issue to be addressed if the market does not find a means of providing longer term contractual certainty (hence enabling investment) even for renewables that are competitive without subsidy.

 

Transport

 

Disappointingly, transport emissions have risen to their highest levels since 2009. There has been some progress made in supporting the roll-out of low emission vehicles, yet further effort is required to achieve mass uptake. The Government should build on the momentum gained from vehicle manufacturer efforts and not inadvertently slow progress through lack of support/regulation and facilitation of infrastructure deployment. The funding and priority given to this in the Queen’s Speech was encouraging.

 

Nonetheless, mass uptake of EVs will need a major restructuring of taxes to replace the fuel duty lost from petrol and diesel sales (exacerbated by the current five per cent VAT on domestic electricity). This is potentially an opening for approaches such as road pricing, which could have big congestion management benefits but have previously been politically difficult.

 

Elsewhere, there remains an open question around how autonomous vehicles (AVs) will impact developments in the road transport sector. On the one hand, AVs could raise demand for additional passenger journeys that would have otherwise been taken in a different form (e.g., public transport). On the other hand, AVs could help improve the overall 'optimisation' of car travel by allowing efficient sharing of fewer vehicles, improving the economics of EVs and accelerating roll-out.

 

Given the transformation in passenger road transport that seems likely, consumer research should be conducted to better understand anticipated public behaviour so the potential outcomes and energy system interactions that are required can be assessed.

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