UKERC Response to Clean Growth Strategy

12 Oct 2017

We welcome both the tone and substance of the Clean Growth Strategy, published today. The government is right to emphasise the positive message from recent UK and international experience: the UK has reduced emissions significantly since 1990 whilst growing the economy. It has benefitted from international policies to reduce technology costs, and now has a large and growing clean energy sector.

There is, of course, much work to do, to ensure that the UK remains on course to meet its carbon targets during the 2020s, and to maximise the benefits in terms of jobs, industrial performance, health and local air quality. The Strategy acknowledges, and includes substantial new proposals to start to close important policy gaps. Many of which address recommendations made in our Review of Energy Policy in November 2016.

Energy and resource efficiency

The proposals on energy and resource efficiency across the economy are particularly welcome. The wish to improve all homes to a band C standard by 2035 sets an important long-term signal, similar to the phase out of petrol and diesel vehicles by 2040. Crucially, new measures are proposed to help achieve this standard – with a particular emphasis on poorer households through the extension of ECO to 2028. The accompanying call for evidence on building a market for energy efficiency draws on our research as part of this process, and will be crucial in underpinning further policies – especially for so-called ‘able to pay’ households.

Our research with the Centre for Industrial Energy, Materials and Products (CIEMAP) has shown the scope for resource efficiency to deliver economic and emissions reduction benefits across the economy. The Strategy recognises this, and starts to set out how government can help businesses to realise these benefits. The evidence shows that many of these will not be taken up if without public policy incentives.

Heat and low carbon technologies

In the related area of heat, the main message is a good one – to move off gas grid homes away from carbon intensive fuels now, and to continue to support demonstration and deployment of a range of low carbon heating solutions.

The power sector proposals are a step forward too, though the all-important need to strengthen investor confidence beyond 2021 has not been dealt with fully. Carbon pricing in the 2020s and a new mechanism to pay for low carbon technology deployment are promised, but specifics are missing – pending the Autumn budget next month. There are signs that the government is taking seriously the need to support the cheapest low carbon generation technologies through appropriate incentives – including onshore wind in some circumstances. We would urge government to build on this, and to ensure that all near market technologies can compete on a level playing field.

Carbon capture and storage

The partial reprieve for carbon capture and storage (CCS), which has not featured in policy strategy at all over the last two years are welcome,  but risk keeping this technology in a holding pattern. The Strategy is right to emphasise the need for CCS on industry as a priority. But the deployment of CCS is in trouble globally. The question for the UK to answer in the coming months is whether we are going to take the lead, especially given the stalled progress world-wide. Relying on others may not be enough. The lesson from the offshore wind success story is clear: the UK and other countries need to implement a policy framework that allows deployment to be financed, and not just more R.D&D funding.

Transport

On road transport, the UK has joined many other countries and companies in setting a phase out target for sales of new petrol and diesel vehicles, though the UK target date of 2040 could have been more ambitious. Having set those long term goals, the main emphasis needs to be on helping consumer adoption, to grow the market and to establish a national charging point network. The Strategy includes welcome measures on these. As UKERC argued in our Policy Review, new low emissions vehicles are not the sole answer to the UK’s transport challenges: so the pledge of over £1bn for walking and cycling is welcome too as part of a more holistic sustainable transport strategy.

UK TIMES model

The UK TIMES model (UKTM), developed by UKERC and UCL Energy Institute’s wholeSEM teams in partnership with the Department for Business, Energy and Industrial Strategy (BEIS), was used in the strategy to explore energy options and opportunities for the UK, looking towards 2050 (page 150). UKTM models the whole UK energy system and identifies how the UK might achieve an affordable low-carbon economy. In the Clean Growth Strategy, the model underpinned analysis of 2050 pathways. The first objective of the analysis was to understand the range of possible long-term outcomes or three different economy-wide decarbonisation pathways. The second objective was to confirm these pathways were consistent with targets set by the fifth carbon budget and 2050 emission reduction targets.