The Clean Growth Strategy is intended to set out the government’s proposals for decarbonising the UK economy through the 2020s and early 2030s.
Any views on the government's Clean Growth Strategy need to consider the context in which it has been produced, including the following:
- The legally binding targets on the UK under the Climate Change Act 2008 (the “Act") requiring a reduction of UK greenhouse gas emissions by 80% below 1990 levels by 2050. The Strategy itself is a product of the Act focusing as it does, on meeting the carbon budgets for 2023 to 2027 and 2028 to 2032.
- The government’s equivocal approach to aspects of clean energy policy. There can be no doubt that the withdrawal of financial incentives and the planning barriers placed in the way of some renewable energy technologies in recent years have had a damaging effect on the UK's reputation as a clean energy leader. This is evidenced by the UK’s slide down the EY Renewable Energy Attractiveness Index from medal positions to 10th.
- The abandonment of the government’s much heralded carbon capture and storage (CCS) competition.
- The clamour from Scotland, Wales and English regions to allow clean energy to be deployed and flourish in their particular areas.
- The need more than ever before, for innovation and new industries to propel the UK forward in the coming years particularly in light of Brexit.
What do we make of the Strategy?
The upbeat tone in the Strategy represents a welcome departure from the government’s previous equivocal approach referred to above. The Strategy recognises that tackling climate change through clean policies is directly linked to a prosperous economy.
In the forward, Theresa May states that clean growth is at the centre of the UK’s Industrial Strategy and a key area for her government. In a similar vein Greg Clark, the Secretary of State for Business, Energy and Industrial Strategy proclaims that "the move to cleaner economic growth is one of the greatest industrial opportunities of our time". This recognition that the clean energy sector leads to jobs, growth and prosperity is something that industry and government should have been emphasising to the public for many years.
What is interesting is the Strategy’s acceptance that investing in new technologies today can pay future dividends. The government expressly acknowledges that the progress to date in growing the UK’s economy while simultaneously reducing emissions has “altered the way that we see many of the trade-offs between investing in low carbon technologies that help secure our future but that might incur costs today”
All the more puzzling therefore, that the Strategy is non-committal on how many new clean energy technologies on the cusp of major deployment and industrialisation will be supported to capitalise on the achievements made so far. Warm words are fine, but if ever there was a time to grasp the opportunity, it is now.
Some interesting announcements
The Strategy announces £557 million of funding to be made available for the next contract for difference (CFD) auction round for “less established technologies”. This was one of the most prominent headlines, but the Strategy omits to say exactly which technologies will be included within that pot. The successes of the last auction in helping to drive down the costs of offshore wind are much heralded and the offshore sector should be rightly praised. However, the government seems to be placing a lot of reliance on offshore wind while ignoring other clean technologies. There is no doubt that offshore wind brings serious megawatts of clean capacity to the UK, but to be consistent with the Industrial Strategy the government must also consider areas in which modest investment could reap huge long term gains. The Strategy also ignores the significant role that onshore wind and solar have played and can play as sources of low cost, clean energy generation.
There is a reconfirmation that the government is committed to the Hinkley Nuclear Power Project and that it will work with other developers to secure competitive pricing for future nuclear projects.
The Strategy also announces that, subject to State aid approval the government will include remote island onshore wind within the next CFD auction round. The implications of this for other less established technologies will have to be studied closely.
There is a recognition that not enough has been done to decarbonise our heat sector. £3.6 billion is going to be made available to support an upgrade of a million homes through the Energy Company Obligation and for energy efficiency improvements in homes and buildings. Aside from this the Strategy is, once again, fairly light on how decarbonisation of our heat sector will actually occur.
There is further impetus given to the move to electric vehicles (EVs) with the government including a target that by 2050 almost every car and van will emit zero emissions. We know that EVs are an area of furious activity at the moment with car manufacturers making near daily announcements and that the required supporting infrastructure must play catch up.
What is less clear is how the government intends to source the electricity required to power the growth in EVs and how it plans to strengthen network connections and ensure the delivery of infrastructure in a way which can complement the move to the decarbonisation of our electricity generation and usage.
Then there are the puzzling announcements
The Strategy reveals an apparent renewed enthusiasm for CCS, with a commitment to invest £100 million in CCS for industrial purposes. This is all very well, but those involved in the aborted CCS competition will be understandably sceptical and might well be reticent about investing money, time and effort into developing this technology.
As mentioned above, the Strategy makes no reference to the future role for solar or onshore wind which the government must by now, have gathered is right up there with the cheapest form of clean generation.
The Strategy has generally been well received for the scale of its ambition and the restated support for the clean energy sector from a government which over the last few years has dampened investment into clean energy right at a time when the UK needs to capitalise on the industry and jobs that such investment brings. However, one cannot help reading the Strategy as being somewhat short on detail, perhaps deliberately so.
The Strategy throws down the challenge to the clean energy sector to demonstrate to government what can be achieved in terms of industry, jobs and deployment to justify the initial investments that are required. If the industry can do this then, if the Strategy is to be believed, the government is prepared to provide the necessary support.