On Thursday 30 March, the government is expected to announce a package of responses to the global race to lead on green tech advancement, Chris Skidmore’s Net Zero Review and last year’s High Court ruling that its current Net Zero Strategy is inadequate and unlawful.
Billed as the UK government’s response to the Biden administration’s Inflation Reduction Act, the so-called ‘Green Day’ or ‘Energy Security Day’ announcements must form the backbone of a substantial green industrial strategy, or the UK risks being left behind as the US, EU and China race ahead supporting emerging markets and future green technologies, attracting global investment.
The question is, will the government seize the opportunities for growth and public wellbeing green investment presents, while also making good on planetary obligations? Or will it continue to bury its head in the sand and see the UK slip into insignificance on the global stage?
What are we expecting?
Electric Vehicles
A mandate on how many electric models car manufacturers must sell each year (Zero Emissions Vehicle mandate) and a deal for a new gigafactory in Somerset supplying batteries to Jaguar Land Rover to make electric vehicles.
Greenpeace UK view: “Both of these measures are needed but without further action to secure more battery plants to deliver green job opportunities and adequate charging infrastructure to meet demand, the government’s EV strategy would still be in need of a jump start.”
Nuclear Power
Rules on Small Modular Reactors (SMRs) competition announced and a wider plan for meeting the target of 24GW from nuclear power by 2050.
Greenpeace UK view: “Nuclear power has consistently failed to deliver on time or to budget. It’s an expensive distraction from genuine climate and energy security solutions, like renewable power and grid upgrades. SMRs don’t yet exist, are highly unlikely to solve our energy woes and won’t provide a solution to the waste hazards that come with nuclear.”
Renewables
A decision on planning rules for onshore wind in England, seeking to end the de facto ban, although the consulted re-wording of planning guidance seemed unlikely to make much difference. Extra money (£205m) will also be released for the next renewable contract auction (AR5 auction round), which opens on 30th March.
Greenpeace UK view: “Annual auctions for contracts to generate clean power are needed but inflation and post-covid supply chain issues mean prices have gone up while financial support has remained the same, which could hamstring the industry. Unless funding is increased, the current auction will generate less than one fifth of contracted capacity at the last renewables auction, and much less than is needed to hit government targets. As for the nonsensical onshore ban – renewables remain the cheapest, cleanest, most popular form of energy in this country – it’s time it was lifted to maximise the number of projects providing cheap power to the grid.”
Energy efficiency
It’s possible that regulations, or a further consultation on them, will be confirmed on private rented sector landlords to provide a minimum energy efficiency standard of EPC rating C in properties by 2028 – this is a live debate within the Energy Bill and has received cross-party support.
Greenpeace UK view: “This is long overdue, and so is a properly funded scheme to improve the energy efficiency of all homes. Insulation is the cheapest most effective way to lower bills and emissions but the only thing plummeting has been installation rates. Much more is needed to make the UK’s housing stock fit for the 21st century.”
CCUS
a plan for development and naming of the companies expected to attach to the clusters in East of England and around Morecambe Bay, and possible repackaging of the £20bn Budget announcement for all 6 projects across the UK.
Greenpeace view: “Carbon capture is not zero carbon; is unlikely to see dramatic cost reductions or be scalable; and is often used for greenwashing by oil and gas companies so they can carry on polluting. It doesn’t do what it says on the tin and certainly should not be prioritised as part of a green industrial strategy.”
Reallocation of levies from electricity
Grant Shapps stated at the weekend in the Sun that the government will “commit to addressing the imbalance between gas and electricity costs in household bills, to make electricity cheaper for the long term.”
Greenpeace view: “This is something the government have been considering for the past 18 months. Making the price of electricity cheaper relative to fossil gas is a good thing, as we must transition to an energy market led by electricity from renewable sources. The levies must be charged in a way that wont lead to additional household hardship.”
Windfall Tax
Rewrite of the current windfall tax imposed on the extreme profits of oil and gas companies – the Energy Profits Levy. A price-floor could be introduced whereby companies would not be required to pay the tax if the price of oil or gas drops below a certain level.
Greenpeace view: “Oil and gas companies have made astronomical profits due to the war in Ukraine and have driven the cost of living crisis in the UK. The IPCC warned last week – again – about the misery that will be inflicted upon society by rampant climate change and yet it seems once again that ministers are obsessed with sweetening the pill of any policy change for the oil and gas lobby, whilst legitimate complaints from the renewables industry about their windfall taxes seem to be left permanently on hold.”
… other possibilities:
Hydrogen
Secretary of State for the Department for Energy Security and Net Zero, Grant Shapps, recently told the Environmental Audit Committee (EAC) that the ‘Green Day’ announcement would include plans to boost hydrogen.
Greenpeace UK view: “Green hydrogen will be key to slashing emissions from hard to decarbonise sectors like the steel industry. However, hydrogen from fossil fuels (blue hydrogen) is not compatible with the UK’s net zero plans, since you burn and release gas in creating it. It’s like claiming beef burgers are vegetarian because cows eat grass.”
Rosebank
An announcement on the licencing of the largest undeveloped oil and gas field in the North Sea. Developing Rosebank is expected to cost £4.1bn to develop, could receive an effective taxpayer subsidy worth £3.75bn through tax breaks and the loophole in the government’s windfall tax that spares oil and gas investment.
Greenpeace view: “Approving Rosebank would do nothing to help Energy security in the UK as the UK will not own any of the oil which is extracted. Burning Rosebank’s oil and gas would create more CO2 than the combined emissions of all 28 low-income countries in the world, including Uganda, Ethiopia and Mozambique. The science is unequivocal – there can be no new oil and gas if we want to limit global warming to 1.5 degrees.”
Heat pumps
Grant Shapps also hinted something around heat pumps to EAC this month but with no detail.
Greenpeace UK view: “Our European neighbours are snapping up heat pumps like hot cakes, while UK households are being left out in the cold. The Boiler Upgrade Scheme is failing and needs a much more rounded strategy to increase heat pump uptake including skills packages, independent consumer advice and support, advertising and promotion, as well as much more money.”
Green steel
There is an active conversation in government about the future of the Scunthorpe smelting plant, and about the ‘greenness’ of the government support required. Unions have continued to lobby intensively for urgent support to save UK steel. Trails imply that the Chancellor would want to attach green conditions to any bailout.
Greenpeace UK view: “It is essential that the UK steel industry continues to support skilled workers while moving towards zero carbon, and this should be a condition of any support given to the smelting industry. More generally it would allow the industry to benefit from cheap renewable electricity rather than having it pegged to the gas price, and creating a domestic market demand for clean steel.”
What a real ‘Green Day’ looks like:
A genuinely world-leading and competitive green agenda needs to address not just carbon emissions, but also the welfare of the population. It must create thousands of secure green jobs, deliver cleaner air, lower bills, liveable communities and warmer homes to spread the wealth and benefits more fairly across society.
Renewables
The UK is currently a leader in offshore wind, however the reality is that current renewables expansion plans are nowhere near enough to retain a competitive global market share or to achieve our net zero targets. The government must:
- Remove all barriers to onshore and offshore wind and invest in solar, including streamlining planning.
- Introduce a mandate for solar on all new buildings.
- Give Ofgem a net zero statutory objective in the Energy Bill to accelerate progress on grid upgrades and other technologies to increase renewables uptake.
Electricity storage, grid management and green hydrogen
High renewables electricity systems will become the norm over the next few years and the key tools to make it work will become desirable. The government must:
- Upgrade the national grid, including providing additional capital investment, to reflect the increase in electricity storage that will be necessary to meet demand.
- Introduce a cap and collar mechanism for the contracting of green storage tech, as is currently used for interconnectors. This would create a route for market for green storage developers through guaranteeing a minimum income while ensuring contract costs are not excessive; these contracts would be technology-specific and apply to green hydrogen, liquid air, flow batteries, pumped hydro and any other green storage tech that comes forward.
Electric Vehicles
In addition to a strong ZEV mandate and investment in a Somerset battery factory outlined above, the government needs to go much further. The government must:
- Generate investment in more gigafactories. Ten are needed by 2040 according to battery research experts, but the UK currently has just one, with a second potentially announced on Green Day.
- Increase funding (and mandate) for local authorities to roll out charging infrastructure.
- Support a ban on deep sea mining as a source of the critical minerals, and invest in international R&D collaboration to improve battery efficiency and reduce reliance on cobalt.
Green steel
The Climate Change Committee states that steelmaking should be near-zero emissions by 2035, if the UK is to meet net zero. In order to do this, the government must:
- Deliver a public private partnership where the government covers the additional capital costs of conversion to electric arc furnaces or smelting using green hydrogen.
- Create a market for green steel by convening significant users (e.g. car companies) or mandating through public procurement (including e.g. Network Rail).
Energy efficiency
The best way to slash emissions from homes, reduce our reliance on gas, cut energy bills, end fuel poverty and beat the cost of living crisis is to insulate homes. The Government must:
- Commit to upfront investment of £5.3 billion for energy efficiency measures, alongside a major programme of energy efficiency work through the rest of the 2020s.
- Bring in targets and regulation for minimum energy efficiency standards beyond the private rented sector (PRS) should be brought forward, in line with the PRS.
- Require all new buildings to meet net zero energy for all uses by 2030.
- Establish and sufficiently fund a new Warm Homes Agency to provide market confidence and encourage private investment by supporting, enforcing and guaranteeing the delivery of targets and regulations for building efficiency and low carbon heating.
Heat pumps
The UK has one of the worst heat pump sales record in Europe. However, with housing responsible for almost one fifth of the UK’s carbon emissions, getting home heating systems off gas and onto electric heat pumps, powered by renewable energy, is absolutely fundamental to meeting our net zero targets. The government must:
- Commit £3.37bn now as part of a market mechanism to accelerate the transition away from gas heating towards installation of heat pumps.
- Confirm that boiler manufacturers will be required to shift production to heat pumps on a timeframe in line with a commitment to ban all new gas boilers by 2033.
Financial regulation
It has been estimated that the net zero transition will need $125 trillion of investment globally by 2050, however public and private finance flows for fossil fuels are still greater than those for climate adaptation and mitigation. The government must:
- Use the Financial Services and Markets Bill to give financial regulators a new statutory objective to align the financial system with the 1.5 degree goal in the Paris Agreement.
Public transport
To build a resilient future we must connect communities across the country and create thousands of jobs in green transport. The government must:
- Provide at least £10bn a year additional public investment in low carbon transport infrastructure across the UK.
- Reallocate the funds earmarked for new road building under the £27bn Road Investment Strategy (RIS2) which is due to overspend on its budgets by billions of pounds.
Just transition
A proactive and well-funded strategy is required to guarantee the creation of high volumes of secure green jobs across the country, to ensure that the workforce is sufficiently trained to access those jobs, and to transition the existing skills of high carbon workers into the green economy. The Government must:
- Lead the strategy, working in collaboration with empowered local authorities, businesses, workers, their unions and other relevant stakeholders.
- Provide a minimum of £4bn a year to aid skills development, retraining and local investment.
