Conclusions and recommendations
The 2020 targets
1.On its current course, the UK will fail to achieve its 2020 renewable energy targets. This would be an unacceptable outcome given the UK’s reputation for climate-change leadership. (Paragraph 14)
The Renewable Heat Incentive
2.If the Government confirms the proposed changes for biomass in the Renewable Heat Incentive, it must consider what support needs to be given to the supply chain for it to adapt at sufficient speed. (Paragraph 21)
3.The Government’s proposed reforms to the Renewable Heat Incentive (RHI) are not the optimal pathway to the 2020 renewable heat target. Heat pumps have proven unsatisfactory in actual use, yet are being prioritised over biomass—which has been successful. Sudden realignment from small to large biomass will damage the former’s supply chain, and the latter is unlikely to be taken up at scale. Above all, biomethane is crucial to meeting the 2020 target and must remain a funding priority. The Government should revise its RHI reforms to reflect these priorities, especially in protecting biomethane support. (Paragraph 30)
4.The Renewable Heat Incentive (RHI) cannot succeed without consumer engagement, which has so far been inadequate. An improved marketing strategy, explaining the comfort, health, environmental and financial benefits of RHI installations—rather than technicalities—and targeted at the actual patterns of heat-system replacement, must be made central to RHI reform. Biomethane injection is the only RHI-supported technology that does not require individuals to choose it: this strengthens our case for the RHI to focus on biomethane until consumer engagement is addressed.
(Paragraph 34)
The Renewable Transport Fuel Obligation
5.Introducing E10 fuel would help the UK reach its 2020 transport target. The Government must begin laying the groundwork for an E10 introduction as soon as possible, including a strong public information campaign. There is evidence that a duty differential would help, and the Government should produce an Impact Assessment to quantify this claim. (Paragraph 38)
6.The level of the Renewable Transport Fuel Obligation (RTFO) must be raised to approximately 9% by 2020; the Government must begin doing so without delay. It is clear that the 2020 renewable transport target will not be met without rapid progress on the RTFO. (Paragraph 42)
Bioenergy
7.Bioenergy has an important role in the UK’s future energy mix: it can decarbonise sectors and niches that electrification cannot, and delivers substantial carbon reductions under good conditions. Nevertheless, unchecked bioenergy expansion risks substantial CO2 emissions. This means that electrification is likely to be the preferred option where possible. (Paragraph 50)
8.Clarity on the carbon footprint of bioenergy use and expected future levels of bioenergy is crucial to the UK’s long-term decarbonisation. The Government must review its published Bioenergy Strategy in 2017. (Paragraph 51)
9.Setting the crop cap is a balancing act: 7% may be too high to avoid significant indirect land-use change, but 1.5% may be too low to achieve the 2020 transport target. The Government’s reforms to the Renewable Transport Fuel Obligation must find the appropriate compromise. (Paragraph 54)
Transport electrification
10.We regret the Government’s changes to Vehicle Excise Duty, which reduced incentives for ultra low emission vehicle (ULEV) uptake and may be interpreted as wavering commitment to road electrification. The Government should reconsider abolishing the tiered system. In the future, fiscal incentives for ULEVs must be maintained with greater consistency. (Paragraph 63)
11.Road electrification implies a significant reduction in tax revenue in the long term. It is important that this does not deter the Government from rolling out ultra low emission vehicles (ULEVs), for which current financial support must continue. HM Treasury should publish options to address the future fiscal implications of near-universal ULEV uptake: this would improve confidence in Government finances and the future of road electrification. (Paragraph 65)
12.Development of charging infrastructure has generally been promising, and is not the main barrier to ultra low emission vehicle (ULEV) uptake. However, this has not been the case in rural areas. (Paragraph 67)
13.The Government should take the lead on awareness of ultra low emission vehicles (ULEVs) through greater public procurement. (Paragraph 71)
14.Heavy Goods Vehicles (HGVs) must be decarbonised but electrification, even in the long term, is unlikely. The Government must ensure HGV operators are sufficiently supplied and incentivised to move to biomethane over the medium-to-long term. (Paragraph 73)
Heat electrification
15.Adding together unsatisfactory heat-pump performance, the seasonality of heat demand, and the limits of the electricity networks—which the Government also intends to use for transport energy in the long term—it is clear that the Government cannot rely on complete heat electrification. Bioenergy, a greener gas grid and district heating all have roles to play in this sector. (Paragraph 75)
A whole-systems approach?
16.Decarbonisation is of critical importance, and the resources to achieve it—primarily bioenergy and the electricity networks—are limited: efficient resource allocation is therefore key. There is evidence that Government’s overall renewables strategy has been hampered by inconsistent approaches. The creation of a new Department for Business, Energy and Industrial Strategy is an opportunity for greater cooperation and consistency. The new Economy and Industrial Strategy Cabinet Committee should place meeting the UK’s renewables and decarbonisation targets at the heart of its terms of reference. We moreover recommend that, for any policy that deploys scarce resources to achieve decarbonisation and renewables objectives, the Government compares its costs and benefits against other potential uses of those resources—this process could be included in Impact Assessments. (Paragraph 79)
Leaving the EU
17.If the UK misses, or reneges on its commitment to, the 2020 renewables targets, this will undermine confidence in its commitment to future targets, including the 2050 decarbonisation objectives of the Climate Change Act 2008—both rely on the Government driving policy to change patterns of electricity, heat, and transport consumption and supply; both are Government promises in which stakeholders must be able to trust. Leaving the EU renders the status of the 2020 targets uncertain. The Government must reassess its capacity to meet them and, if able, recommit to them notwithstanding its exit from the EU. If it is not, it must set and commit to replacement targets and explain how these will support the longer-term decarbonisation objectives of the 2008 Act as effectively as the 2020 targets. (Paragraph 82)
© Parliamentary copyright 2015
7 September 2016