Summary
The UK is legally bound to provide for 15% of its energy needs—including 30% of its electricity, 12% of its heat, and 10% of its transport fuel—from renewable sources by 2020. We expect the Government will surpass the electricity sub-target, but success in this sector may not compensate for underperformance in heat and transport. It is not yet halfway towards 12% in heat and the proportion of renewable energy used in transport actually fell last year. On its current course, the UK will fail to achieve its 2020 renewable energy targets.
The Renewable Heat Incentive (RHI) and Renewable Transport Fuel Obligation (RTFO) are the key policies to meet the 2020 targets in heat and transport. The Government’s proposed RHI reforms are not the optimal pathway to the 12% heat sub-target; it should revise them to reflect that heat pumps have proven unsatisfactory, biomass has been successful, and biomethane is crucial to the 2020 target. Moreover, the RHI’s consumer engagement has been inadequate: it requires an improved marketing strategy.
In transport, the RTFO has been capped at 4.75% since 2013: this is well below the level needed to meet the 2020 target, and the Government must begin raising it without delay. A roll-out of E10 (a fuel composed of 90% petrol and 10% bioethanol) will also be required; the Government should begin laying the groundwork for its introduction, including a strong public information campaign. Setting a limit on the proportion of transport biofuels from food crops—the ‘crop cap’—is a balancing act, but the Government’s proposed 1.5% limit may be too low to achieve the 2020 transport target and must be reconsidered.
Beyond 2020, heat and transport will likely depend on some combination of bioenergy and electrification. Over 70% of the UK’s renewable energy is bioenergy, which has an important role in the UK’s future energy mix, but there are concerns about its carbon footprint. We note the current sustainability criteria for some bioenergy and urge Government to continue to balance its benefits with its harms. Unchecked bioenergy expansion risks substantial CO2 emissions so electrification is likely to be the preferred option where possible. In heat, it is clear that the Government cannot rely on complete electrification—especially given limits to electricity-network capacity. Central to the Government’s plans for transport electrification is an aim for all new cars to be ultra-low emission by 2040 (presently, only 1.1% are). To achieve this ambition, it should reconsider its changes to Vehicle Excise Duty and take the lead on awareness of electric vehicles through greater public procurement.
Our overarching concern is that the UK is at risk of failing to meet the targets not because they are impossible, but because Government departments have not cooperated effectively. Heat and renewable transport incentives are administered through completely separate incentives, with both sectors competing for resources like biomethane and electricity-network capacity. Creating the new Department for Business, Energy and Industrial Strategy may enable more joined-up thinking: the Government should take advantage through deeper analysis of how best to use scarce resources to achieve renewables and decarbonisation targets across different policy areas.
The 2020 targets were set by the EU but adopted by the UK, and still have many merits—even as the UK prepares to leave the EU. If the UK misses, or reneges on its commitment to them, this will undermine confidence in its commitment to future targets, including the 2050 decarbonisation objectives of the Climate Change Act 2008. Whatever the Government’s plans, it must commit to and deliver on credible renewables commitments that maintain consistency with its long-term obligations.
© Parliamentary copyright 2015
7 September 2016