Energy policy in the UK takes another step towards a greener future

  • New commitments set out a positive way forward on clean energy


  • Public affairs teams can help organisations shape policy in 4 ways


  • This year will see even more activity on energy policy and net zero 


The last few weeks have seen the Johnson government focused on Brexit negotiations, given that the transition period to exit the European Union is at the end of December.

 

However, the government has also managed to make several major policy announcements that will shape its political and policy ambitions until the end of this Parliament. Attention is turning to other significant policy issues, including new energy infrastructure and achieving the UK’s legal net-zero target.

 

This week the government set out the direction of travel it intends to take on energy policy with the long-delayed Energy White Paper. It follows major announcements on a UK National Infrastructure Strategy, the Committee on Climate Change Sixth Carbon Budget and the Prime Minister’s 10-point plan. Ministers also want the delivery of new energy infrastructure to be at the heart of government activity with plans to create a cross-government Ministerial Delivery Group to tackle obstacles.

 

As the demand for electricity is predicted to double by 2050, mainly due to low carbon heat and transport, the white paper sets out the framework for energy to play a vital role in the UK’s economic recovery, spark a green industrial revolution and create 220,000 jobs by 2030.

 

The white paper may not be the detailed plan that energy geeks, international investors or climate change campaigners would like to see. Questions remain on how the gap will be closed between the net-zero target vs. what’s in the white paper. Despite this, it is an encouraging signal that ministers plan to accelerate the pace of delivery and pave the way for renewables to transform the UK’s energy system. 

 

Public affairs leads can help their organisation to define how to influence government by ensuring engagement strategies focus on four areas:

 

        1. Leveraging private capital and maximising public investment.

 

        2. Delivering infrastructure in communities and winning local support.

 

        3. Inspiring consumers to change their behaviour.

 

        4. Advising decision-makers on how to create optimal regulation for a green     

            future.

 

Generating clean energy

The new policy aims to build on the progress made from decarbonising the power sector and secure enough clean power for projected future demand. There will be a new round of competitive auctions to secure investment and delivery of an additional 12GW of renewable energy sources. These technologies are offshore wind, onshore wind, solar, hydrogen, floating offshore wind and tidal. The competitive auction will not take place until late 2021.

 

In addition, the white paper reaffirms the government’s commitment to delivering an increase in offshore wind volumes by 2030 — from 30GW to 40GW. An exciting development is that this will include 1GW of floating offshore wind. Future policy will also focus on exploiting marine energy, including wave and tidal.

 

The government plans to increase the size of the hydrogen sector with an ambition to deliver 5GW of hydrogen by 2030. Ministers hope hydrogen will play a valuable role in helping to meet consumer demand and balancing the energy system when demand is at a peak. A new Hydrogen Fund will be established, with £240million focused on producing the gas. The government wants to see a pilot of a hydrogen-heated town in place by 2030.

 

There remains a commitment to supporting a new nuclear renaissance in the UK and reach a final investment decision on one major nuclear plant by the end of the current Parliament. Discussions have started again with EDF Energy on building a new nuclear plant —Sizewell C — which could provide 7 percent of the UK’s energy needs. As the financing of new nuclear is a serious political issue, given the potential for astronomical cost overruns, the government emphasises that value for money will need to be proven.

 

Further thinking will take place on a financing model for new nuclear projects and the role of public investment in stimulating future nuclear construction. This proposal introduces a regulated asset base model, though this model could see consumers foot the bill for the cost of nuclear construction. The model would be designed to leverage more capital and reduce consumer cost over the lifetime of a power station.

 

In addition, the white paper sets out an ambition to stimulate a market in modern small nuclear reactors and funding of £385 million to develop this market. Finally, the government wants to see the delivery of a nuclear fusion plant by 2040. 

 

Innovation and transformation

Unlocking the potential of nascent and emerging technologies is a further ambition the government has. A Net Zero Fund —worth £1billion — will focus on developing technology that can store energy for longer. In addition, as more energy demand and generation is decentralised, smarter energy systems and more innovation between national and local energy networks will be needed. This will reduce consumer bills and ensure the effective operation of the energy grid.

 

The white paper confirms an existing funding commitment of £1.3 billion to roll out more electric vehicle charging infrastructure, including rapid charging on England’s motorways and major roads. 

 

By Spring 2021, we will hopefully see a new strategy on how data and digital technology can transform the energy system and how data can be used to unlock benefits for consumers and businesses. There will be a new £2 million competition on modernising access to energy data.

 

Energy efficiency

Delivering low carbon heat is essential if the UK is going to meet the net-zero target. The white paper reiterates the government´s commitment to increase the number of electric heat pumps from 30,000 to 600,000 a year by 2028. Future policy will decide if new homes should be banned from connecting to the existing gas network to encourage cleaner energy sources for heat instead. Finally, this year the government aims to create a new grant to help people opt for heat pumps in place of fossil fuel alternatives. 

 

2021 will be a critical year for energy policy

There are other announcements in the white paper on protecting energy consumers, changing the way the energy system is governed and on a new UK emissions trading regime for life after Brexit.


Energy sector enthusiasts can look forward to many more announcements during the year. These include a net-zero strategy, transport decarbonisation, hydrogen, heat and buildings, industrial decarbonisation (including carbon capture & storage), smart energy systems, competition of energy networks, policy on green jobs, and finally, the COP26 climate change summit that the UK is hosting.

 

If you would like to discuss how this policy may develop or any public affairs challenges you have, please get in touch for an exploratory conversation.





Public Affairs Experts - December 18th, 2020



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