The middle day at International Energy Week a fortnight ago saw two important energy announcements making the news both at and outside the event. Though the stories point in different directions.

First, the UK’s Climate Change Committee (CCC) set out an interim target for the UK to cut carbon emissions by a huge 87% by 2040 – on the way towards its ‘net zero’ target by 2050 – and what the government needs to do to achieve this. The CCC is charged with producing legally binding, and progressively reducing, national carbon ‘budgets’ for each five-year period to 2050. It reports that the UK has already reached the halfway point towards the net zero target compared to emissions recorded in 1990.

CCC Chief Executive Emma Pinchbeck came along to International Energy Week to tell delegates herself how the 2040 target could be met. Up to now, around half of the gains have come from changes to the way we generate electricity, but future gains will have to come from significant reductions in emissions across end-use sectors, including surface transport, buildings, industry and agriculture. Further electrification of these sectors will be the key – mainly heat pumps for building and more electric vehicles (EVs).

Crucially, these changes will eventually deliver lower energy bills for UK consumers, and higher levels of energy security, once gas no longer dominates energy generation, says the CCC. No one can be certain of the size of these projected advantages, particularly with today’s rising energy bills, but Pinchbeck said that the key is the increased efficiency of the transitioned energy economy. EVs will be cheaper to run than today’s fossil cars and heat pumps are several times more efficient than gas boilers.

Electrification is key
Electrification is (almost) everything. Earlier in the day, we heard from the government’s head of Mission Control, established last summer to accelerate the transition of Britain’s electricity system away from fossil fuels to deliver clean – and cheaper – electricity by 2030. Previously chief of the CCC, Chris Stark knows the territory well and views the task, to see 95% of UK electricity from clean sources by in just five years, as ‘right on the edge of can be done’.

Around 68% of Britain’s electricity now comes from renewables and nuclear, said Stark. For the short-term future, electricity storage will also be important. But the most pressing need is to find ways to accelerate the connection of new green generators to the grid, in what amounts to a redesign of a 1960s-era system based on a few coal and nuclear power stations to one dominated by multiple offshore and onshore renewable generators, and batteries.

So far so good – huge ambitions to electrify anything that can be electrified; to increase renewable generation to supply the power; and to increase the efficiency of its use in buildings and vehicles. Tough missions to 2030 and 2040, expensive too, but these are programmes that will deliver cost, security and climate benefits, according to their proponents. 

BP puts a foot on the gas 
And the other announcement being talked about that day at International Energy Week? It was oil major BP taking a significant step back from some of the transition technologies talked up by the CCC. It revealed a ‘fundamental reset strategy’ in favour of increasing investment in and production of oil and gas, while adopting a ‘disciplined’ investment approach to the energy transition, focusing on fewer, more profitable projects. ‘Total capital expenditure in transition businesses will fall by more than $5bn than previous guidance,’ said the company.

‘We will grow upstream (oil and gas) investment and production to allow us to produce high margin energy for years to come,’ said CEO Murray Auchincloss. ‘And we will be very selective in our investment in the transition.’

Now, no one should expect a multinational oil company to see the world as governments and their climate advisors do. But it was nevertheless striking to read the rather backward-facing news of BP’s new global direction at International Energy Week while listening to the CCC vision of the UK future.

Perhaps a newspaper article from Swedish professor Brett Christophers has the best, if also pessimistic, explanation: it’s just capitalism at work. Christophers suggests that, in the five years following the 2015 UN climate change conference in Paris, European governments started to talk about taking action to make fossil fuel production less profitable. Some of the oil companies aimed to be ahead of the curve and to gradually transition into cleaner energy.

But, from around 2020 such talk faded away, and western governments also continued to issue new licences for oil and gas exploration. Those forward-looking oil companies, operating in a system that requires them to seek the highest return on investment, took note.

It’s governments, of course, rather than companies, that have the power to change the situation, by making fossil fuels less profitable, or renewables more so – or both, says Christophers.

I note that the UK government is taking steps in this direction with its ambition for future activities in the North Sea. These are: to end (finally) approvals for new oil and gas projects; to support the building of new clean energy projects; and to make the employment-transfer-to-clean-energy-projects system work. Currently at the consultation stage until the end of April, these plans could signal the long-overdue start of a real and fundamental change for energy policy, at least for the UK.

• Further reading: ‘What is the primary energy fallacy?’. Dr Jan Rosenow FEI, Senior Research Associate at Oxford and Cambridge Universities, challenges the fallacy that fossils fuels cannot be fully replaced by renewables in the energy transition. He suggests that policymakers should prioritise replacing fossil fuel technologies with efficient, zero-carbon alternatives instead of marginally more efficient fossil fuel technologies.
• Find out what the International Energy Agency, BP and Shell had to say at International Energy Week about a predicted large increase in natural gas reaching global markets by the end of the decade. And their views on the importance of reducing methane emissions in producing those fossil-fuel projects.

The views and opinions expressed in this article are strictly those of the author only and are not necessarily given or endorsed by or on behalf of the Energy Institute.