Clean Growth: Technologies for meeting the UK’s emissions reduction targets Contents

Conclusions and recommendations

UK Greenhouse Gas Emissions

1.The UK has achieved world-leading emissions reductions for over two decades. However, this has not been exclusively the result of Government policies. The Government has decided to carry forward the equivalent of 88 million tonnes of carbon dioxide from the second carbon budget to the third, as permitted by the Climate Change Act 2008, pending advice from the Committee on Climate Change on technical changes to how the UK calculates and reports its emissions. The Government must not use outperformance of the second carbon budget to weaken its targets for subsequent carbon budgets. As soon as possible after the Committee on Climate Change’s advice on technical changes to the UK’s emissions baseline, the Government should unambiguously declare its commitment to follow that advice. (Paragraph 12)

2.Progress against the UK’s emissions reductions targets must not be achieved by ‘offshoring’ UK industry and displacing the UK’s territorial emissions to be counted instead in its consumption emissions. The Government should do more to meet its commitment to increase the prominence of consumption emissions statistics in its publications. The Government should include consumption emissions alongside territorial emissions in all future publications on UK emissions. It should consider the impact of all policies on consumption emissions as well as territorial emissions, and ensure that progress is not achieved by ‘offshoring’ emissions to other countries to the detriment of the global environment. We do not accept that territorial emissions should be the sole basis for international negotiations. The United Kingdom’s decarbonisation targets should also include consumption emissions. (Paragraph 16)

3.We commend the Government for adopting a net-zero emissions target, in line with the 2015 Paris Agreement. It is vital now that this ambition is backed up with policies to ensure that the UK meets its targets. The Government must develop and act on policies to ensure that the UK is on track to meet a 2050 net-zero emissions target. It must seek to achieve this through, wherever possible, domestic emissions reductions. However, it should also work to develop robust international frameworks for carbon units trading, to ensure that effective and efficient methods for reducing global emissions are supported where available. (Paragraph 19)

4.We commend the Government on responding promptly to the Intergovernmental Panel on Climate Change’s 2018 report on 1.5˚C global warming, by asking the Committee on Climate Change (CCC) for advice on net-zero emissions. However, it is disappointing that the Government excluded existing carbon budgets from the scope of this advice. The Government should explicitly state, in advance of the CCC’s advice on the sixth carbon budget, its willingness to amend the fourth and fifth carbon budgets in line with the CCC’s cost-effective path to net-zero emissions by 2050 if recommended to do so. (Paragraph 21)

5.Lord Deben, the Chairman of the Committee on Climate Change, gave evidence to our Committee. He did not declare his interest as the Chair of Sancroft International. This company has had amongst its clients Drax, the largest recipient of renewable energy subsidies in the country, and Johnson Matthey, who are about to make a huge investment in electric vehicles. These should have been declared to the Science and Technology Committee. (Paragraph 23)

The Clean Growth Strategy

6.The Government’s own projections suggest that the UK is not currently on track to meet its existing emission targets, although we note that there are several significant policies and ambitions that have not yet been included in these calculations. Nevertheless, the rate of deployment of several key low-carbon technologies is significantly lower than what is required to meet the Government’s ambitions, and various stakeholders—including the Committee on Climate Change—have expressed concern at the current and projected rate of progress of the UK’s decarbonisation. In order to meet the fourth and fifth carbon budgets, emissions reductions cannot continue only in sectors that have decarbonised successfully so far, and must be significantly accelerated in sectors such as transport, heating and agriculture that have made little progress. The step-change in decarbonisation required will need policies to support the deployment and roll-out of existing technologies alongside, and co-ordinated with, significant research, development and demonstration of less mature technologies. (Paragraph 36)

7.The UK can simultaneously achieve economic growth and global emissions reductions through the export of low-carbon technologies to other countries. This potentially offers global emissions reduction at lower cost than the same level of reduction in the UK. However, opportunities for delivering emissions reductions outside of the UK were not included in the 50 key policies and proposals of the Government’s Clean Growth Strategy. When it laid legislation strengthening the UK’s long-term emissions reduction targets, the Government said that it would review the net-zero target within five years, to review the extent to which other countries had followed the UK’s lead in setting and acting upon decarbonisation targets. (Paragraph 40)

8.Ahead of its review of international reaction to the UK’s net-zero target, the Government should actively encourage other countries to take similarly ambitious action. It should develop a strategy by the end of 2020, identifying opportunities for the UK to encourage and support decarbonisation in other countries, and prioritising action that will achieve the greatest global emissions reduction. This should include cross-Government action to support British companies exporting technologies that can deliver emission reductions abroad. (Paragraph 41)

9.The Government should increase the number of Ministers across Government Departments working on climate change, including a new Ministerial role at the Foreign and Commonwealth Office with explicit responsibility for delivering multi-lateral action internationally on climate change. Reflecting the critical importance of mitigating climate change, and to improve cross-Government co-ordination, the Minister charged with co-ordinating the UK’s action on national and international decarbonisation should be a full Cabinet Minister. (Paragraph 43)

Decarbonising power generation

10.We commend National Grid Electricity System Operator for its ambition to be able to manage a ‘zero carbon’ electricity grid by 2025. This goes significantly beyond the Government’s projections for possible renewable power deployment by 2032, and indicates that any ‘over-delivery’ on the deployment of low-carbon power generation in the 2020s will not be incompatible with the electricity transmission system. We urge distribution network operators to adopt a similar ambition to National Grid System Operator, of operating a zero carbon grid by 2025. Ofgem should work with distribution network operators to ensure that the regulatory framework required to allow this is in place. If sufficient progress is not made we urge the Government to consider strengthening Ofgem’s mandate to require the distribution network operators to speed up the investment and upgrading of the distribution networks required. (Paragraph 53)

11.The Government has indicated that it expects requirements for new power generation capacity to be met through offshore wind power, nuclear power and gas-fired power with carbon capture and storage. There is considerable risk that these technologies may not provide the generation capacity required. The Government must set out in its response to this Report how it intends to monitor and address any potential shortfall in power generation capacity, and ensure that this can be achieved with low emissions and costs. (Paragraph 54)

12.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. Onshore wind power in particular could lower costs to energy consumers as well as contributing to the UK’s decarbonisation, and there is widespread support for increased Government support for such projects across Great Britain. 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. (Paragraph 62)

13.The marine energy sector has come together to propose market support mechanisms to support marine and other less-established renewable power technologies through technology development and commercialisation. The Government should examine the case for supporting ‘Innovation Power Purchase Agreements’ and setting minimum allocations of future contract for difference auctions to specific technologies, to support the development and commercialisation of renewable power technologies that are less-established than offshore wind power. (Paragraph 64)

14.The Government should develop, by the end of 2020, a clear planning permission framework for re-powering existing onshore wind farms, and ensure that national planning policy facilitates re-powering with the most efficient technology and does not block proposals that attract local support. It must also monitor the proportion of onshore wind power sites that apply for permission to repower, and be ready to provide market support (for example through eligibility for contracts for difference) if this is not close to 100%. (Paragraph 68)

15.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. Nonetheless, the move towards a framework that facilitates greater flexibility and innovation in these markets is welcome, provided it offers a fair and sufficient means of compensation for owners of small-scale renewable generation capacity and a sufficient incentive for people to make the initial investment in such technologies. 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. (Paragraph 74)

16.The Government must make sure that business rates incentivise embedded low-carbon generation and do not cause existing embedded generation to be disconnected. The Government should reduce business rates for organisations that consume the majority of the power they generate to match the rates of organisations that sell the majority of their generation—and stop the administrative burden of loopholes that are being used to counter the discrepancy in rates. The Government should also reinstate the microgeneration exemption from business rates for renewable energy installations producing no more than 50kW. In its response to this Report, the Government should set out why combined heat and power units have been classed as excepted plant and machinery under the business rate regulations, but such a provision is not applied to solar panels and energy storage systems. (Paragraph 76)

17.Ofgem must consider the interests of future consumers as well as current consumers in its decisions, including the need for decarbonisation. The projected increases in network costs for consumers and businesses that have installed on-site generation and flexibility technologies, arising from Ofgem’s proposed network charging reforms, will act as a disincentive for further consumers or enterprises to install similar technologies. This is not conducive to the overall goal of decarbonisation. However, Ofgem is right to seek to avoid the costs of network usage falling increasingly on vulnerable consumers. Ofgem must revise its proposed network charging reforms to ensure that they do not disincentivise the deployment of technologies that will contribute to the decarbonisation of the UK’s energy system. The Government must ensure that vulnerable consumers do not pay an increasing proportion of network costs, and that all households have the ability to deploy technologies that will reduce their cost of energy and help to decarbonise the economy. (Paragraph 79)

18.Although it is not possible to directly compare the costs of different power generation technologies, the Government is right to support nuclear power subject to it representing value for money, because full lifecycle emissions from nuclear power will help the UK to achieve its emissions reduction targets. The Government must make a decision on implementing a regulated asset base framework for nuclear power by the end of this year. Subject to value for money, the Government should seek to support new nuclear power generation so as to sustain, but not grow, the UK’s nuclear power industry. It must anticipate any gap in future generation capacity such a policy would cause, and support sufficient renewable power alternatives to fill the gap. (Paragraph 84)

19.The Government’s support for small modular nuclear reactors in the Nuclear Sector Deal is welcome. The Government must ensure that it delivers on the recommendations from the Expert Finance Working Group on Small Nuclear Reactors, including on regulatory developments, without undue delay. The Government should set out, in its response to this Report, what steps it has taken since the publication of the Group’s report and propose a pathway—with indicative dates for key milestones—for the deployment of a first-of-a-kind small modular nuclear reactor by 2030. (Paragraph 88)

20.Nuclear fusion is unlikely to make a substantial contribution to the UK’s net-zero target for 2050. Nevertheless, it could ultimately provide significant quantities of energy from abundant fuels and without radioactive waste. The Government must ensure that, whatever the terms of the UK’s departure from the European Union, the long-term future of nuclear fusion research in the UK is not disrupted. It should additionally review the case for providing support for the nuclear fusion industry similar to the measures introduced recently by the US Government. (Paragraph 92)

Decarbonising transport

21.There is significant scope for emissions reductions in the transport sector as a result of the purchase of more efficient vehicle models, without requiring technological developments or alternative fuel sources. However, the current fiscal incentives for cars are not sufficient to encourage consumers to purchase lower-emissions vehicles, given that most of the increase in average new car emissions in 2017 was caused by consumers choosing more emitting models. The Government must 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. This must include consideration of post-sales vehicle excise duty and the second-hand market. (Paragraph 96)

22.The Government must commit, prior to the UK’s withdrawal from the European Union, to adopting transport emissions regulations that are, as a minimum, in line with current and future EU regulations on transport emissions. This should include legislation regarding emissions reductions requirements for heavy duty vehicles, regardless of the terms of the UK’s departure from the EU. (Paragraph 98)

23.The Government has said that a 2040 ban on the sale of conventional cars and vans is consistent with the UK’s current emissions reductions targets for 2050, but this has been disputed by independent organisations such as the UK Energy Research Centre and the Committee on Climate Change. There is a strong case for bringing the date for a future ban forward, given that several manufacturers already have more ambitious commitments in place. The Government should act on the advice of the Committee on Climate Change and 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. (Paragraph 102)

24.The availability of chargepoints is a significant factor in consumer uptake of electric vehicles. Although the extent of the UK’s charging infrastructure is growing, it is not expanding at a pace to match the roll-out of electric vehicles. Interoperability of different chargepoint networks will be required to avoid the need for a roll-out of multiple extensive networks. Widespread adoption of electric vehicles will not necessarily require an unmanageable increase in power generation requirements, but in order for the electricity demand from widespread electric vehicles to be more comfortably met, and in order for electric vehicles to contribute to increased grid flexibility, smart charging will have to be commonplace. (Paragraph 109)

25.The Government must ensure sufficient roll-out of rapid chargepoints along the strategic road network, and smart chargepoints at domestic, destination (such as places of work or shopping centres) and local sites. It should work with public services and owners of public land, such as schools and hospitals, to accelerate the deployment of chargepoints. The Government’s forthcoming consultation on the regulation of charging infrastructure must determine measures to deliver interoperability, compatibility with a smart energy system, public availability of real-time information on the current functionality of chargepoints, and enforcement powers to ensure that chargepoints are reliable. (Paragraph 110)

26.It is disappointing that the Government cut back the plug-in grant with electric vehicle sales below the indicative target set by the Committee on Climate Change. The Government should set out, by the time of the Spring Statement 2020, how it intends to adjust the plug-in grant scheme in the future, using a transparent framework linked to ultra-low emissions vehicles sales. (Paragraph 112)

27.The Government should evaluate the impact of the free charging offered by the ChargePlace Scotland charging network as well as other potential incentive schemes for electric vehicle use. (Paragraph 114)

28.Uptake of ultra-low emissions vehicles can potentially be driven in the fleet vehicle market more quickly than in the private consumer market. Options for supporting the uptake of ultra-low emissions vehicles in the fleet vehicle market include fiscal incentives and public procurement targets. The Government should commit to adopting regulations on the public procurement of ultra-low emissions vehicles that are at least as ambitious as the EU’s post-Brexit. It should further commit to having a 100% ultra-low emissions vehicle fleet by 2022 and to supporting local authorities in also having 100% ultra-low emissions fleets by 2030. (Paragraph 117)

29.One current barrier to the uptake of ultra-low emissions vehicles in the UK is an insufficient supply to meet consumer demand, which has led to long waiting times. There is evidence in the UK and internationally suggesting that this could be partly due to inadequate support for the ultra-low emissions vehicle market from manufacturers and dealers. The Government should review the functioning of the ultra-low emissions vehicles market annually, to determine if there are sufficient incentives for manufacturers and dealers to drive the adoption of ultra-low emissions vehicles, with the first review published by the time of the Spring Statement 2020. This should include consideration of the value of introducing minimum sales mandates on manufacturers, using tradeable sales certificate framework. (Paragraph 120)

30.A ban on the sale of new diesel-powered heavy-goods vehicles will be needed by 2040 in order for the sector to achieve net-zero emissions by 2050. This will require policies now that will drive the development of alternative technologies and demonstrate the technical feasibility of such a ban. The Government should introduce a ban on the sale of new diesel-powered heavy goods vehicles, for no later than 2040. It should additionally support trials of low-emissions HGV technologies on a timeframe that aligns with the proposed ban, and work with network operators and the delivery industry to plan for the potential charging infrastructure required for zero-emissions HGVs. Given that some HGVs are already being converted to run on hydrogen on a commercial basis, the Government should review the opportunity for market support mechanisms to drive higher rates of HGV conversion. (Paragraph 124)

31.The Government’s current long-term targets for decarbonising transport focus heavily on reducing exhaust emissions and increasing sales of low-emissions vehicles, rather than delivering a low-emissions transport system. 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-emission versions. 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. The Government should commit to ensuring that the annual increase in fuel duty should never be lower than the average increase in rail or bus fares. (Paragraph 131)

32.Any move to electric vehicles must have an associated environmental impact assessment, including the potential for recycling lead, lithium, cobalt, nickel and graphite. Hydrogen technology may prove to be cheaper and less environmentally-damaging than battery-powered electric vehicles. The Government should not rely on a single technology. (Paragraph 132)

33.The Government should review the potential to reduce emissions and support shared car ownership by incorporating Government Department car fleets into car sharing schemes. It should encourage other public bodies and local authorities to do likewise. (Paragraph 133)

34.We commend the Government on its existing work to support the establishment and use of urban delivery consolidation zones. However, with just two major examples of completed projects to point to, there is clearly scope for a wider roll-out. The Government should support the development of urban delivery consolidation centres, working with local authorities to assess the potential of such centres to reduce emissions and identify strategies to support their deployment and effective use. (Paragraph 136)

Decarbonising heating

35.Heating accounts for around a third of the UK’s overall emissions, which has remained essentially unchanged since 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. (Paragraph 142)

36.The use of hydrogen as a fuel offers significant promise for low-carbon heating, transport and industrial processing, as well as for energy storage and to help manage intermittent renewable power generation. However, evidence from large-scale trials will be needed to allow the Government to make informed decisions on the UK’s future energy system. Demonstrating the safety of hydrogen as a fuel is a critical first step, and we commend the Government for its support of the Hy4Heat programme. The Government must complete the safety demonstration work for hydrogen as an urgent priority. The Government should also commit to completing at least one large-scale trial of hydrogen by 2025 conditional upon safety approval, and start developing now the terms for a competition to deliver such a trial. This should involve co-ordination of existing demonstration and modelling projects and should lead to the terms of a competition being announced no later than the end of 2020. (Paragraph 150)

37.Blending hydrogen into gas supplied via the gas grid could provide an initial market for early hydrogen production facilities. Once clear evidence is obtained on the level at which it is safe to mix hydrogen into the existing gas grid, and which is compatible with existing appliances, the Government should amend regulations to raise the proportion of hydrogen permitted in the grid. With higher blends of hydrogen permitted, the Government should act to support the development of this as a market for hydrogen, perhaps through feed-in tariffs or low-carbon obligations analogous to the Renewable Transport Fuel Obligation. (Paragraph 153)

38.The Government’s announced future homes standard is welcome. However, regulations requiring improvements to the efficiency of new buildings must be introduced before 2025. The Government should re-introduce the zero-carbon homes standard as a matter of urgency, and no later than the end of 2019. It should additionally ensure that building regulations accurately reflect the current carbon intensity of electricity in Great Britain, and that this figure can be regularly updated (at least annually) in future. (Paragraph 160)

39.The Government should launch its consultation on Part L of the building regulations by the time of the Spring Statement 2020. Beyond that, it must ensure that homes built today are compatible with a net-zero emissions future and that the ‘Future Homes Standard’ reflects this. (Paragraph 161)

40.The Government should set out, in its response to this Report, the criteria that will be used to determine ‘practicality’ and ‘affordability’ in its energy efficiency targets, and provide an indicative percentage of homes that it is intending to help reach Band C by 2035. (Paragraph 165)

41.Previous initiatives to encourage the installation of 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. 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. Homebuyers should then be able to make energy efficiency improvements within a defined time after purchasing the property, and claim back corresponding reductions in the Stamp Duty paid retrospectively. The adjustments made to Stamp Duty could be designed in order to be revenue-neutral to the Government. Robust certification of energy efficiency will need to be put in place to ensure that such a scheme is not open to exploitation and the Government should consider how best to incentivise upgrades in council, housing association and rented homes. (Paragraph 171)

42.The Green Deal’s ‘golden rule’ heavily restricted the energy efficiency improvements that could be paid for by the scheme. Although some energy efficiency improvements may not deliver net cost-savings to homeowners, they may still represent cost-effective options for the UK to meet its emissions reductions targets. The Government’s new energy efficiency policy must enable homeowners to access the finance needed to cover the upfront costs of energy efficiency improvements that offer a cost-effective contribution to the UK’s decarbonisation, not just net cost-savings to individual homeowners. In analogy to the existing ‘Help to Buy’ scheme, the Government should 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. (Paragraph 175)

43.We commend the Government for supporting research into, and the development of, ‘green mortgages’. The Government should consider the case for encouraging mortgage lenders to take energy efficiency into account for all mortgage applications, and should support the industry in capturing any potential in such a system for driving a market in energy efficiency improvements. (Paragraph 177)

44.We commend the Government for strengthening the requirements on landlords to improve the energy efficiency of the least efficient homes in England and Wales. However, these measures will affect only 2.5% of the housing stock. The Government should amend building regulations so that renovations to buildings must always result in an overall improvement in energy efficiency. (Paragraph 179)

45.The Renewable Heat Incentive has significantly underperformed on the Government’s expectations. With the Renewable Heat Incentive due to close to new applications in 2021, the Government must ensure that it avoids a repeat of the disruption caused by the closure of the feed-in tariff, and announces its plans for the successor scheme to the Renewable Heat Incentive no later than the Spring Statement 2020. The successor scheme must be far more effective than the Renewable Heat Incentive scheme has proven to be. (Paragraph 180)

46.The Government’s announcement that fossil-fuel heating systems will not be permitted in new builds after 2025 may support the growth of supply chains for low-carbon heating technologies and deliver consequent cost-reductions as well. The Government 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. (Paragraph 183)

The UK energy system

47.The development and deployment of energy storage technologies will be critical to the UK’s transition towards a flexible, low-carbon energy system. It is disappointing that the Government has not made the Parliamentary time available to define energy storage in primary legislation. The Government must ensure sufficient support for the development and deployment of energy storage technologies. Large-scale, inter-seasonal storage currently appears to pose the greatest technical challenges, and should be supported through demonstration projects, including in future large-scale trials of low-carbon heating. The Government should provide a dedicated legal definition of energy storage in primary legislation as soon as possible. Such a commitment should be included in the next Queen’s Speech, if Parliamentary time is not found for such legislation before then. (Paragraph 192)

48.The roll-out of smart meters is one important enabling component of a flexible energy system that can match demand to supply, allowing increased deployment of intermittent renewable power generation. However, the Government’s roll-out is severely behind schedule, in part because the original scheme had fundamental design faults, as highlighted by our predecessor Committee and the then Energy and Climate Change Committee. The Government must ensure that it takes all reasonable steps to achieve a national roll-out of smart meters as soon as possible. In order to reduce consumer resistance to smart meters, the Government should run public engagement initiatives to raise public awareness that by having a smart meter installed, consumers can contribute to long-term reductions in the UK’s greenhouse gas emissions. Ofgem should require energy suppliers to collect and publish data on consumer acceptance rates for smart meter installation, and the reasons given by consumers for rejecting a smart meter. The Government should then be ready to act on this information to drive greater installation rates of smart meters, for example by introducing a consumer incentive mechanism. It should also require installation of a smart meter in properties without one whenever the owner or renter changes. (Paragraph 199)

49.Market-wide half-hourly settlement of energy consumption costs will incentivise energy suppliers to offer tariffs that reward consumers for using energy when it is abundant, helping to enable higher levels of intermittent renewable power generation. However, Ofgem has highlighted the dependence of market-wide half-hourly settlement on widespread smart meter deployment. Given the low current uptake of smart meters, this indicates that there could be very significant delays in the introduction of market-wide half-hourly settlement and the benefits of widespread ‘smart’ tariff adoption. Ofgem should clarify what it determines to be the critical mass of smart meters required for market-wide half-hourly settlement. Since the introduction of market-wide half-hourly settlement will help to catalyse smart meter take-up, Ofgem should not set an overly stringent critical mass, and should be prepared to recover the costs of incomplete smart meter deployment from the suppliers of those consumers who do not have smart meters (in a way that protects vulnerable consumers). (Paragraph 200)

50.Energy capacity secured through the Capacity Market supplies energy to the grid relatively infrequently throughout the year, and supports the co-deployment of increasing levels of intermittent renewable power generation. Nevertheless, contracts awarded through the Capacity Market provide funding for energy capacity technologies. So far, this has mostly supported technologies such as gas-fired and diesel generators, which are not in line with the UK’s ambition to reach net-zero emissions. In keeping with the UK’s ambition to move towards net-zero emissions, the Government should ensure that the Capacity Market supports low-carbon technologies as far as possible without detriment to the wider deployment of renewable power generation. As it reviews the success of the Capacity Market to date, the Government should consider introducing a minimum proportion of Capacity Market funding that must be awarded to low-carbon technologies. (Paragraph 206)

51.Non-generation suppliers bidding for Capacity Market contracts should be eligible to bid for contracts of up to fifteen years, in line with new generation facilities. (Paragraph 207)

52.Regulation of UK energy markets will play a key part in the development of a smart and flexible energy system. The RIIO price control framework has helped to support innovation in the gas and electricity networks, but it is vital that the second price control framework promotes even greater levels of innovation as the energy networks undergo a period of significant change. 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. (Paragraph 212)

53.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. In addition, some have expressed concerns that the regulator focuses too heavily on reducing costs for current consumers, at the expense of contributing to the UK’s decarbonisation. When the Government reviews the upcoming recommendations from the National Infrastructure Commission on the future regulation of the energy market, it 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. (Paragraph 216)

54.Local authorities 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. The Government should adopt UK100’s proposals for ‘Clean Energy Action Partnerships’. (Paragraph 223)

55.Emissions reductions in the transport and heating sectors will involve greater impact on, and require greater involvement of, consumers than the decarbonisation of the power generation sector, which is where the UK has achieved the bulk of its emissions reductions so far. 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. In co-ordination with existing organisations, such as the Energy Saving Trust, who work to raise consumer awareness of available emissions-reduction measures, 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. (Paragraph 227)

56.The Government 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. (Paragraph 228)

57.Product labelling already helps consumers choose products based on qualities such as healthiness, environmental impact and employee or animal welfare. The Government should explore the feasibility and potential benefits of establishing a standard for the emissions associated with the manufacturing and transportation of consumer goods, to enable retailers to label their products with emissions information and to enable consumers to factor this into their purchasing decisions. (Paragraph 230)

58.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. The Government should aim to cover the costs of measures through progressive means rather than through energy bills. (Paragraph 233)

59.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. (Paragraph 234)

Carbon capture and storage

60.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. This puts the Government’s desire for value-for-money in context. We commend the Government for recapturing lost momentum in the development of carbon capture and storage. However, there are concerns that its action plan lacks clarity and ambition. (Paragraph 241)

61.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, and should set out in its response to this Report: 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. (Paragraph 242)

62.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 Government should plan for the deployment of greenhouse gas removal technologies capable of removing around 130 million tonnes of carbon dioxide by 2050. It should develop and publish, within six months of this Report’s publication, an illustrative pathway detailing the full extent of greenhouse gas removal that it projects to be possible from each major technology option by 2050, as well as a strategy for ensuring this pathway is feasible, including any policy decisions required now. (Paragraph 252)

63.The Government should launch a consultation to inform the development of a future framework for managing and incentivising greenhouse gas removal, and to provide greater certainty to encourage private investment in the development of these technologies. The consultation should examine potential frameworks for valuing, incentivising, measuring, reporting and validating greenhouse gas removal by different technologies. (Paragraph 253)

64.The step-change in greenhouse gas removal required by the Government’s new ambition to reach net-zero emissions by 2050 will require 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. In line with its future strategy for greenhouse gas removal, 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. (Paragraph 254)

65.Solar radiation management does not address the fundamental problem of excess concentrations of greenhouse gases in the Earth’s atmosphere, and does not appear to be a long-term solution to global warming. Nevertheless, it may be considered as a short-term solution if global greenhouse gas emissions are not reduced quickly enough to avoid significant global warming. In this scenario, detailed understanding of the wider effects of solar radiation management will be vital. UK Research and Innovation should review the current state of research into solar radiation management, the likely timeframes that would be required for detailed research and potential testing of such technologies, and the case for any increased research now. It should ensure that research into solar radiation management is sufficient to allow for any potential future decisions to be made on the deployment of such technology to be sufficiently well-informed. (Paragraph 258)





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