Summary
In 2015, the states party to the United Nations Framework Convention on Climate Change (including the UK) agreed that they would seek to restrict the increase in the global average temperature to “well below 2°C above pre-industrial levels” and pursue “efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. The Intergovernmental Panel on Climate Change has warned that global warming of 2˚C above pre-industrial levels could lead to increased risk of droughts and flooding, sea level rises, ecosystem change and consequent species loss and extinction on land and in the sea, reduced productivity for agriculture and fishing and climate-related poverty and disease. The UK was the first country to legislate for legally binding greenhouse gas emissions targets and earlier this year became the first country in the G7 to legislate for net-zero emissions. Since 2000, the UK has achieved greater decarbonisation than any other country in the G20. It has outperformed its first (2008–2012) and second (2013–2017) carbon budgets by around 1% and 14% respectively, and is on track to outperform its third carbon budget (2018–2022). However, the Committee on Climate Change has warned that the UK is not on track to meet its fourth (2023–2027) and fifth (2028–2032) carbon budgets.
The UK’s progress
There are a number of areas in which Government policy to support the deployment of low-carbon technologies has been delayed or cut back. For example:
- the ‘plug-in grant’ for low-emissions cars was reduced from £4,500 to £3,500 for the lowest-emissions cars in October 2018, and cut completely for other low-emissions cars;
- the ‘feed-in tariff’ for low-carbon power generation was closed in April 2019 without a successor scheme in place;
- the Energy Companies Obligation scheme was restricted to vulnerable households only in November 2018, despite the Government conceding that this would “result in lower carbon emissions reductions being achieved”—the Government consulted on “building an ‘able-to-pay’ market for energy efficiency” in October 2017 and said that it would respond in 2018, but a response has still not been published; and
- following the cancellation of the ‘zero-carbon homes’ policy in 2015, the Government pledged in 2018 to consult on changes to Part L of the building regulations (covering energy performance of buildings) in order to support the development of low-carbon heating technologies—however, this consultation has still not been launched (although the Chancellor announced in the 2019 Spring Statement that a ‘Future Homes Standard’ would be introduced to deliver homes with “low carbon heating and world-leading levels of energy efficiency”, but only by 2025).
Achieving the Government’s key targets will require an acceleration of deployment of low carbon technologies:
- the Government wants “almost every car and van to be zero emission” by 2050, which is equivalent to removing almost 20,000 conventional cars every week on average, from now until 2050, whereas around 1,200 new ultra-low emissions vehicles were registered each week in 2018;
- the Government also wants “as many homes as possible to be EPC Band C by 2035 where practical, cost-effective and affordable”. This would equate to improving the energy efficiency of around 20,000 English homes (just under 40 per English constituency) per week until 2035—in contrast, the Committee on Climate Change reported that around 2,400 energy loft or wall insulations were installed per week in 2017;
- the Government has said that “by 2050, we will also likely need to fully decarbonise how we heat our homes”, which would require at least 15,000 homes to transfer to a low-carbon heating system every week until 2050—this compares to a projection of 220 low-carbon heat systems being installed each week under the Government’s ‘Renewable Heat Incentive’ from now until 2021; and
- the Government has set out its “aspiration” to reach woodland cover of 12% in England by 2060, which would require the net growth of around 120 hectares of woodland per week—in 2018, net woodland growth was around 20 hectares per week.
Recommendations for change
Transport
The transport sector is now the largest-emitting sector of the UK economy. The Government should bring forward the proposed ban on sales of new conventional cars and vans to 2035 at the latest. This ban should explicitly cover hybrid as well as internal combustion engines. There are significant emissions associated with the manufacture of vehicles. In the long-term, widespread personal vehicle ownership does not appear to be compatible with significant decarbonisation. The Government should not aim to achieve emissions reductions simply by replacing existing vehicles with lower-emissions versions.
Alongside the Government’s existing targets and policies, it must develop a strategy to stimulate a low-emissions transport system, with the metrics and targets to match. This should aim to reduce the number of vehicles required, for example by: promoting and improving public transport; reducing its cost relative to private transport; encouraging vehicle usership in place of ownership; and encouraging and supporting increased levels of walking and cycling.
In the near-term, the Government must also reconsider the fiscal incentives for consumers to purchase both new and used vehicle models with lower emissions, and develop a strategy by the time of the Spring Statement 2020 to use vehicle excise duty and other incentives to drive the purchase of vehicle models with lower average emissions.
Heating and energy efficiency
Domestic, commercial and industrial heating is responsible for around a third of the UK’s overall emissions, which is unchanged from 2009. The decarbonisation of heating will be critical to the UK achieving its long-term emissions reductions targets, but there remains considerable uncertainty surrounding what mix of low-carbon heating technologies represents the best decarbonisation pathway for the UK, or what mix the Government will pursue. The Government must urgently develop a clearer strategy for decarbonising heat. This will require large-scale trials of different heating technologies operating in homes and cities to build the evidence base required for long-term decisions. The Government must commit now to large-scale trials of low-carbon heating technologies, convening relevant stakeholders to determine what evidence must be gathered and to co-ordinate existing work. It should further support the deployment of low-carbon heating technologies by setting out a clear roadmap by the time of the Spring Statement 2020 for rebalancing levies on electricity and gas, to better reflect the emissions intensities of each fuel.
Emissions associated with heating can also be reduced through energy efficiency measures such as improved insulation. Previous initiatives to encourage domestic energy efficiency improvements in the ‘able-to-pay’ market have failed because they have focused too narrowly on providing financial support for specific interventions. The Government’s new energy efficiency policy must provide all homeowners with the incentive to make energy efficiency improvements to their property, with particular thought given to lower income households, as well as the financial means to do so. By the time of the Spring Statement 2020 the Government should consider adjusting Stamp Duty so that it varies according to the energy performance of the home as well as the price paid for it. The Government should additionally establish a ‘Help to Improve’ scheme by July 2020 that offers matched funding and interest-free loans to homeowners, to cover the costs of making energy efficiency improvements.
Power generation
Power generation was responsible for around 15% of the UK’s greenhouse gas emissions in 2018. The power generation sector has achieved significant decarbonisation over the course of the last carbon budget period, accounting for 75% of the UK’s total emissions reductions between 2012 and 2017. Nevertheless, the Committee on Climate Change has made clear that “further reduction in the emissions intensity of power generation […] remains the lowest-cost path towards economy-wide decarbonisation”. Although onshore wind power and large-scale solar power are low-cost and low-carbon, the deployment of new installations of these technologies has fallen drastically since 2015. The Government must ensure that there is strong policy support for new onshore wind power and large-scale solar power projects for which there is local support and projected cost-savings for consumers over the long-term. The Government should actively encourage and support local authorities to adopt planning practices that promote local support for such renewable energy projects.
The Government must additionally develop mechanisms to promote community ownership and profit-sharing of low-carbon projects, such as joint ventures, split ownership or shared revenue. The delay between the end of the feed-in tariff scheme and the start of the Smart Export Guarantee scheme has caused unnecessary disruption to the smart energy and small-scale generation market. The Government must ensure that it reviews the functioning of the Smart Export Guarantee scheme by the end of 2020, and should be ready to include a minimum price floor if there is evidence of a lack of market competitivity—for example, if uptake of tariffs is not significantly greater than the current number of tariffs or if the tariffs offered are significantly lower than wholesale electricity prices.
Market regulation
Regulation of UK energy markets will play a key part in the development of a smart and flexible energy system. The energy markets regulator has an explicit duty to protect consumers’ interests in the reduction of gas- and electricity-supply emissions of targeted greenhouse gases, alongside other considerations such as minimising costs. However, there is no specific link between the regulator’s objectives and the UK’s emissions reduction targets. The Government should consider the case for amending the energy market regulator’s principal objective so that it explicitly includes ensuring that regulations align with the emissions reduction targets set out in the Climate Change Act 2008.
Ofgem must ensure that its second price control framework does not dilute its support for innovation and that the framework should further enable and incentivise network operators to innovate as part of their core business, rather than through standalone projects. Ofgem should work with network operators, energy suppliers and flexibility services providers to ensure that flexibility systems are always considered and deployed ahead of infrastructure construction, where possible and affordable.
Local authorities
Local authorities also have a vital role to play in the UK’s decarbonisation. Many local authorities are pursuing emissions reductions projects, but the capacity and capability for decarbonisation at the local level varies. The Government should introduce a statutory duty on local authorities in England and Wales by Green Week 2020, to develop emissions reduction plans in line with the national targets set by the Climate Change Act 2008, and to report periodically on progress made against these plans.
In preparation for this new obligation, the Government should establish centralised support to help local authorities develop decarbonisation strategies and deliver initiatives aimed at reducing greenhouse gas emissions. It should also support local authorities’ access to low-cost, long-term finance in order to enable the delivery of such strategies.
Consumers
There is also an important role for consumers. Although public support for measures to reduce emissions appears high, this is not always matched with awareness of what actions consumers can take to support decarbonisation. The Government should publish an easily-accessible, central guide for members of the public explaining what measures individuals and households can take to support the UK’s decarbonisation. It should re-introduce a telephone and visiting advice service in England which offers bespoke advice on measures such as residential energy efficiency and low-carbon heating and transport.
Greenhouse gas removal
The Government’s new ambition, to reach net-zero emissions by 2050, will probably require the active removal of at least 130 million tonnes of carbon dioxide from the atmosphere annually by 2050. This is significantly greater than the extent of greenhouse gas removal envisioned in any of the Government’s previous ‘illustrative pathways’ to meeting its original 2050 target, and is also at the limit of what is expected to be reasonably deliverable. The step-change in greenhouse gas removal required will necessitate a significant increase in current support for greenhouse gas removal technologies. Some urgently require research and development, whereas others could be deployed at scale now with the correct support. The Government should be ready to increase funding for research, development and demonstration of greenhouse gas removal technologies. It must also ensure that it is seizing currently available opportunities for greenhouse gas removal, and should develop an effective framework for managing and incentivising forestation and land use management to achieve net emissions removals.
Carbon capture and storage has been widely identified as a key technology for decarbonisation in several sectors. The Energy Technologies Institute estimated, prior to the UK’s net-zero emissions ambition, that meeting the UK’s original 2050 emissions targets without the use of carbon capture and storage would incur an additional £30bn in costs. Industry must have clarity on the framework through which it can invest in carbon capture, usage and storage (CCUS), as well as the timetable for the Government’s CCUS Action Plan. The Government must provide greater clarity on the details of its action plan, including on: what it considers to be deployment at scale; what constitutes cost-effectiveness or sufficient cost-reduction; how it expects to share costs with industry; and what the major milestones for the plan are, as well as when they are expected to be achieved. The Government should learn from previous carbon capture and storage projects and ensure that a sufficient number of projects, of sufficient scale, are undertaken to optimise the chance of successful deployment, and that the knowledge gained from publicly-funded work is publicly accessible.
A just transition
The decarbonisation of the UK’s economy is critical for the environment and is a legally-binding target for the Government. Although decarbonisation offers opportunity for economic growth, it will inevitably also entail costs. The Committee on Climate Change has estimated that achieving net-zero emissions could cost around 1–2% of GDP by 2050. It is important that these costs are shared fairly among citizens. The Government must ensure that its policies for achieving net-zero emissions consider the economic impacts on individuals. For example, the Government should aim to cover the costs of measures through progressive means rather than through energy bills. In line with the Government’s focus on ‘place’ in its Industrial Strategy, the Government should include the potential for supporting economic growth in disadvantaged regions in its determination of where to locate demonstration projects and other initiatives.
Published: 22 August 2019