BEIS unveils long-awaited Clean Growth Strategy

BEIS unveils long-awaited Clean Growth Strategy

The Department for Business, Energy & Industrial Strategy (BEIS) has today published its Clean Growth Strategy, the highly anticipated plan to reduce greenhouse gas emissions between now and 2032.

The Clean Growth Strategy outlines over £2.5bn of investments in new clean technologies and infrastructure, as the Government attempts to meet statutory targets on carbon reduction while continuing to grow the economy. The wide-reaching paper, which has been two years in the waiting, covers areas such as energy efficiency, transport, buildings, heating, and the transition to a smart electricity network.

Key points from the Strategy are detailed below:

Carbon pricing

  • Specifically in relation to the power sector and Carbon Price Support (CPS), starting in 2021/2022, the Government will target a total carbon price. This will give businesses greater clarity on the total price they will pay for each tonne of emissions. The Government will set out more detail on carbon prices for the 2020s in the 2017 Autumn Budget.

 Levy Control Framework (LCF)

  • The existing LCF will be replaced by a new set of controls beyond 2020/21. These will be set out later this year.

 Energy efficiency

  • The aim is to enable businesses and industry to improve energy efficiency by at least 20% by 2030.
  • BEIS says it will take the final decision on the level of energy efficiency next year after the Helm review. Professor Dieter Helm has been appointed to lead the cost of energy review.
  • BEIS will establish an Industrial Energy Efficiency scheme to help large companies install measures to cut their energy use, and work with the financial sector to identify how such measures can be taken forward.
  • The Government promises to develop a framework to support the decarbonisation of heavy industry.
  • BEIS will undertake an evaluation of the Climate Change Agreements to inform any successor scheme from 2023.
  • BEIS is also undertaking a comprehensive assessment of ESOS and will consider future reforms.
  • There is a new consultation regarding a streamlined energy and carbon reporting framework to replace some existing schemes (such as the reporting element of the CRC Energy Efficiency Scheme) and alignment with mandatory annual greenhouse gas reporting by UK quoted companies.
  • The Government will explore with stakeholders how it can improve the provision of information and advice to SMEs to encourage the uptake of energy efficiency technologies.
  • Overall, one possible pathway could involve emissions from business and industry falling by around 30% on today’s levels to as low as 83 Mt by 2032.

Emissions Intensity Ratio (EIR)

  • It will measure the amount of Green House Gasses (GHGs) created for each unit of GDP. Currently, EIR is 270 tonnes/£ million of GDP. It was 720 tonnes/£ million of GDP in 1990. By 2032, we expect the EIR will need to be nearly as low as 100 tonnes/£ million of GDP to meet our ambitions.
  • A Clean Growth Inter-Ministerial Group will be created.

Carbon Capture Use and Storage (CCUS)

  • Up to £20 million for a carbon capture and utilisation demonstration programme has been proposed.
  • A CCUS Cost Challenge Taskforce will be created to deliver a plan to reduce the cost of deploying CCUS;
    • This will then underpin a deployment pathway for CCUS in 2018, setting out the steps needed to meet our ambition of deploying CCUS at scale during the 2030s, subject to costs decreasing sufficiently.
    • The taskforce will work with the ongoing initiatives in Teesside, Merseyside, South Wales, and Grangemouth to test the potential for the development of CCUS industrial decarbonisation clusters.

Batteries and transport

  • The aim is to drive down the cost of key technologies, systems, and processes and increase the value they deliver to consumers (such as with batteries and electric vehicles).
  • New powers under the Automated and Electric Vehicles (EV) Bill will allow the Government to set specific requirements for the provision of EV charge points or hydrogen refuelling infrastructure at motorway service stations and large fuel retailers. Plus ensure that charge points are convenient to access and work seamlessly throughout the UK.
  • The Government will set out further detail on a long-term strategy for the UK’s transition to zero road vehicle emissions by March 2018.

Smart power

  • Shortly, Government will publish a response to the coal phase out consultation.
  • Government also says it wants an ambitious Sector Deal for offshore wind (provided the costs continue to fall, this could result in 10GW of new capacity built in 2020).
  • BEIS wants to see more people investing in solar without Government support and are currently considering options for the UK’s approach to small scale low carbon generation beyond 2019, and will provide an update later this year.
  • Project assessments indicate the potential for at least 9.5 gigawatts more interconnection by the early-to-mid 2020s, in addition to the 4 gigawatts today and the 4.4 gigawatts under construction.

Nuclear

  • The Government is announcing that it will invest £7 million to further develop the capability and capacity of the nuclear regulators to support the development of advanced technologies.
  • A potential nuclear sector deal will be developed as part of the Government’s Industrial Strategy, co-ordinated around the objective of achieving cost reductions.

Innovation

  • The Government is launching a sixth round of the Energy Entrepreneurs Fund, which has been running since 2012. Through capital grants, it aims to support the development and demonstration of innovative energy technologies and processes, with a particular focus on assisting SMEs. This sixth round will offer up to £10 million in funding. Alongside this, a further £4 million has been offered to companies who applied for the fifth funding round, bringing the total to £14 million across the projects supported.

Heat and buildings

  • Up to £10 million of funding will be provided for innovations that aid low carbon heat in domestic and commercial buildings.
  • Up to £10 million will be provided for innovations that improve the energy efficiency of existing buildings.

Along with the proposals, leading up to 2032 BEIS expects

  • Emissions from business and the public sector falling by 30% on today’s levels, through significant improvements in energy efficiency, reducing energy use per unit of output as well as reducing the carbon content of industrial energy use by at least 14% through switching to cleaner fuels.
  • A fall of 19% for household emissions falling by 19%, and emissions from transport decreasing by 29%.
  • Emissions from power falling by 80% on today’s levels, by increasing the share of clean electricity generation to over 80% of demand and moving to a smarter, more flexible system and reducing demand by improving the efficiency of appliances.

BEIS has also outlined 3 main Clean Growth pathways going forward to 2050

  • Electricity pathway – electricity is the main source of energy in 2050. Many more EVs and gas boilers to be replaced with electric heating. An additional 80% use of electricity than today. In this scenario CCUS would not be used by 2050.
  • Hydrogen pathway – use hydrogen to heat our homes and buildings, as well as to fuel many of the vehicles we drive in 2050 and to power the UK’s industry. A large new industry supports hydrogen production using natural gas and capturing the emissions with CCUS.
  • Emissions removal pathway – sustainable biomass power stations are used in tandem with CCUS technology. Carbon is removed from the atmosphere by plants (biomass) as they grow and, when the biomass is used to generate electricity, emissions are captured and stored instead of returning to the atmosphere.

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Ross Moffat

Posted by on Thursday, the 12. October at 16.11

Ross Moffat has been a part of the Market Intelligence team at Utilitywise since early 2014. His responsibilities include delivering Market Intelligence reports to clients and managing the Utility Insights Twitter account. Ross has a first class Honours degree in Business and Marketing from the University of Stirling.