The Energy White Paper (EWP) marks a significant step forward in the UK’s journey to net-zero, setting out how our energy system will need to change. The paper also comes at a critical moment for the UK – as we guide our way out of the coronavirus pandemic, the investment and job opportunities across the UK set out in the EWP will be key for unlocking a green recovery.
The CBI welcomes the ambition that the EWP presents, with a doubling of the amount of electricity we produce, the decarbonisation of power, future-proofing our homes and businesses, further increasing the roll-out of electric vehicles and building a smart and flexible system. The government have not only outlined their vision but also underpinned this with a key principle: fairness. This is a widely welcomed recognition of the important role of consumers in the future system; all costs related to the decarbonisation of the future energy system must be spread fairly across energy consumers.
The EWP explores the future energy system in seven key themes, these are summarised below:
Owing to the falling cost of energy as a result of increased deployment of renewables, and a government-wide commitment to levelling up, the EWP demonstrates for the first time the central role that consumers will play in the future energy system. The EWP clearly outlines the ambition for increased power to the consumer, including greater uptake of smart meters and a review of tariffs and switching. Through the range of consultations to come, government has the ultimate goal to make sure that the transition to net-zero is fair and equitable.
Securing low-carbon power is the key to unlocking decarbonisation across the economy and government’s ambition for low-carbon power generation is reinforced in the EWP, including the 40GW offshore wind by 2030, alongside further targets and funding set out in the 10-Point Plan. Across low-carbon technologies, the EWP commits to a wealth of further consultations and strategies, including a call for evidence on the future of the CfD, decisions on business models for CCUS and a Biomass Strategy committed for 2022. Furthermore, government provides clarity on its ambition for nuclear power plants and nuclear technologies, with a commitment to a £385 million Advanced Nuclear Fund and an aim to build a commercially viable fusion power plant by 2040.
A smart and flexible energy system will be key to unlocking the UK’s full net-zero potential. The EWP sets out government’s vision for a smart, flexible system, based on the information and its ability to support the increased deployment of renewable energy technologies and electric vehicles, delivering these objectives at the lowest cost to the consumers.
The EWP reiterates the government’s phase-out target for the sale of new petrol and diesel cars by 2030, and hybrids by 2035. Government will support the roll-out of EV charging and associated grid infrastructure along the strategic road network, as well as publish a Transport Decarbonisation Plan in 2021. On aviation and shipping, the EWP outlines £35 million of competition to support the development of clean maritime technology (£20m) and production of sustainable aviation fuels (£15m).
Buildings in the UK have a long way to go in order to decarbonise, the EWP acknowledges that 90% of UK domestic buildings rely on fossil fuels for heating and other energy consumption. For domestic buildings, government has committed to publishing a Heat & Buildings Strategy in early 2021 to set out the vision to tackle the challenge of decarbonising buildings and will act to improve the energy efficiency of both the current and future housing stock. Underpinning these actions is a fair and affordable transition for all. For non-domestic buildings, government will take steps to improve energy efficiency and has reaffirmed its commitment to extend the Public Sector Decarbonisation Scheme. To support the decarbonisation of buildings, government provides details for its support for the development of the technologies that will enable the transition, including heat pumps, clean gas, low-carbon hydrogen and electrification.
In the EWP, government outlines the economic significance of the manufacturing industry to the UK as well as its geographic significance across the UK. The EWP commits government to publish the widely anticipated Industrial Decarbonisation Strategy in Spring 2021, this strategy will be critical for providing an in-depth vision for carbon-intensive industries to support investment in low-carbon alternatives. On top of this strategy, the EWP paper confirms government’s ambition for a net-zero industrial cluster by 2040 with the use of CCUS and low-carbon hydrogen, also confirming a Hydrogen Strategy in early 2021 and the Net Zero Hydrogen Fund.
Oil & Gas
The EWP recognises the contribution that the Oil & Gas sector makes to the economy and energy security, and outlines the scale of decarbonisation required. To support the industry in its transition, government has committed to make the UK continental shelf a net-zero basin by 2050, in line with the national net-zero ambition, and agree to a North Sea Transition Deal with the industry within the first half of 2021. In addition, government will ensure there is a regulatory regime that incentivises the switch to clean energy, this will include a review of the Offshore Petroleum Regulator for Environment and Decommissioning.
There is no doubt that 2021 will be a busy but significant year for energy policy, and the CBI’s Energy and Climate Change team stands ready to support our members to navigate through the range of consultations, strategies and policy developments that are expected.