Clean Growth Strategy finally arrives – was it worth the wait?

The government’s long-awaited Clean Growth Strategy, originally promised for delivery in late 2016, was finally published on Thursday and outlines a comprehensive list of policy proposals to continue the UK’s emissions reductions out to the year 2032, and beyond.

The 164-page document from the Department of Business, Energy and Industrial Strategy (BEIS) breaks down plans to reduce emissions into no less than 50 key policies and proposals, spanning across business, industry and home energy efficiency; access to green finance; low carbon heating; low carbon transport; continued decarbonisation of the power sector; public sector leadership; and agriculture and forestry.

Despite the ambitious list of proposals, which target a broad area including the power sector – where a shift away from coal and more renewables have fuelled impressive emissions reductions to date – the document indicates that the plans will still result in a cumulative shortfall of 60mn tonnes of carbon dioxide equivalent against the government’s fifth carbon budget. One of the primary aims of the document was to indicate how the government would meet its fifth carbon budget of a 57% reduction on 1990 emissions levels by 2032.

The document indicates that this shortfall, which the new policy proposals ‘reduces significantly’ compared to previous policies, ‘may be met through the purchase of international credits’. However, the Committee on Climate Change (CCC), which holds the government’s emissions action to account, says that ‘flexibilities’, such as purchasing international carbon credits, should not form part of the government’s plan, which should be delivered solely through domestic action.

The new strategy nevertheless continues UK government efforts to reduce national carbon emissions that date back to the 2008 Climate Change Act and beyond.

BEIS says that over £2.5bn of government funding will be invested in low carbon innovation between 2015 and 2021. The key measures unveiled in the strategy include:

• support for businesses to improve their energy efficiency by 20% by 2030; 
• the mobilisation of £3.6bn of investment to upgrade one million homes through the Energy Company Obligation; 
• the upgrade of all fuel poor homes to Energy Performance Certificate (EPC) Band C by 2030, with as many homes of all types as possible upgraded to EPC Band C by 2035; 
• a focus on low carbon heating by extending heat networks, improving standards on the 1.2mn new boilers installed every year, and reforming the Renewable Heat Incentive; 
• ending the sale of conventional petrol and diesel cars and vans by 2040, and spending £1bn to support the take up of ultra-low emission vehicles; and
• targeting a total carbon price in the power sector, as well as phasing out unabated coal power by 2025.

The strategy also announces a proposal to ‘demonstrate international leadership’ in carbon capture usage and storage (CCUS) through international collaboration and a £100mn investment in the technology. This follows the government’s cancellation of its previous £1bn CCS power station competition in 2015.

BEIS says it has not provided specific emissions reduction estimates for individual policies, rather broader ‘pathways’ for each sector to take account of technological, economic and policy uncertainties.

The Energy Institute Knowledge team has put together an overview of some of the other key elements in the document. A complete list of the 50 measures is available in the full Clean Growth Strategy document.

The strategy was launched the day after the government announced a further £557mn ‘Pot 2’ renewables Contract for Difference auction for less established renewables technologies – including offshore wind – to take place in spring 2019. The last such auction, held in September, saw the cost for planned offshore wind capacity drop 50% from 2015 to a level as low as £57.50 per MWh.

The strategy was launched, aptly, in an innovation centre within London’s Olympic Park, which gets its energy from a combined heat and power unit on-site.

The Secretary of State for Business, Energy and Industrial Strategy, Greg Clark, told a group of industry stakeholders that the strategy will enable the UK to build on its progress on emissions reduction. ‘We are moving to a model of cleaner growth’, he said. ‘While our economy has grown by two thirds in under 30 years, our carbon emissions have dropped by more than 40%.’

Minister of State at BEIS, Claire Perry, said that this progress meant that ‘on a per-person basis, we have reduced emissions faster than any other G7 nation… proving fundamentally as false the view we hear that you can’t protect the planet and raise prosperity at the same time.’

On the strategy, Perry said: ‘There is no one lever we can pull today to deliver the low carbon future we want. Instead what we’ve got to do is to sit down and go through every part of our economy, every part of government and set out the way that we are going to cut emissions and drive innovation – whether that’s investing in research and innovation for energy efficiency, or building new heat networks across the country to drive down the cost of keeping homes warm.’

The strategy is closely tied to the UK’s wider Industrial Strategy, and Perry outlined a new ‘triple test’ for the government to decide which technologies to support. ‘First, does this deliver maximum carbon emissions reduction,’ she said. ‘Second, can we see a clear cost reduction pathway for this technology, and third, can we develop a world leading competitive advantage in this technology in a sizeable global market?’

Reaction
The reaction from business leaders and industry stakeholders at the Clean Growth Strategy launch event seemed largely positive, though there was a focus on the need to now put the strategy into action. Others thought it didn’t go far enough.

Sean Spiers, Executive Director of Green Alliance, said that while the strategy was a great vision, particularly welcoming the focus on energy efficiency, there needs to be more detail on tackling domestic heat. ‘It is certainly a welcome move in the right direction,’ he said. ‘The test now will be to embed the strategy across government and encourage investment in clean growth by giving businesses the certainty they need.’

Louise Kingham OBE FEI, Chief Executive of the Energy Institute said: ‘The strategy breathes new life into decarbonising the UK and the skills that will make it happen. Taking energy efficiency seriously in homes, businesses and industry will cut emissions, bring down bills and increase productivity more effectively than anything else.’ 

‘Putting CCS back at the table and action to tackle emissions from heat, alongside renewables, nuclear and electric vehicles make this a credible plan,’ she said. ‘But meeting the UK’s carbon targets is ultimately a numbers game and the real proof will be in the delivery.’

Lord Deben, Chairman of the CCC said: ‘We note that the Clean Growth Strategy suggests that “flexibilities” in the Climate Change Act could be used to meet the carbon budgets in place of domestic action. This should not be the plan. The clear intention of the UK’s fourth and fifth carbon budgets is that they are delivered through domestic action to keep the UK on the lowest-cost path to the 2050 target to reduce emissions by at least 80% compared to 1990 levels. That should be the goal, without the use of accounting flexibilities or reliance on international carbon credits.’

The strategy does not have much to say on Brexit, nor was it talked about at the launch event. Mike Clancy, General Secretary of Prospect, said: ‘It is deeply disappointing that the strategy has nothing to say on the risks to UK research from Brexit or on developing the skilled workforce needed to deliver low carbon growth. If the UK wants to be a world leader on low carbon energy, we need a serious industrial strategy that addresses the skills shortages and investment already facing the UK in engineering and the energy sectors.’

The Solar Trade Association said that as the strategy is light on detail for solar, and it is not offering Contracts for Difference for the technology, the UK government is ‘artificially holding back’ solar power. Its Chair, Jonathan Selwyn, said: ‘It beggars belief that the Green Growth Strategy almost totally ignores solar – the most popular and cost-effective means of driving the UK’s energy transformation. We call on the government to shake off its blinkers and provide a level playing field for all energy technologies to ensure the solar industry, consumers, local people and the environment get a fair deal.’

On the shortfall for the fifth carbon budget, Gareth Redmond-King, Head of Energy and Climate at WWF said: ‘The news on improving homes is a victory for owners, renters and landlords… but overall the UK Government admits that it will miss most of its targets. They are not delivering the emissions reductions needed in the next decade, relying instead on past success to offset missed targets with the rapid power decarbonisation that we’ve seen to date.’

The Association for the Conservation of Energy CEO, Dr Joanne Wade said: ‘We very much welcome the aims, targets and aspirations of the Clean Growth Strategy and recognise it as a clear step in the right direction. The scale of the opportunity is huge, ACE research shows that the net present value to the UK is at least £45bn in energy efficiency savings. The UK’s building stock is in dire need of urgent action, which can only be delivered through policy support and fiscal incentives.

Image: Where low carbon investment will be targeted
Source: BEIS