UK Energy White Paper aims to unleash green economic recovery

The much-awaited UK Energy White Paper was published on 14 December 2020, promising to ‘unleash a green economic recovery’ and supporting up to 220,000 jobs over the next decade, while keeping energy bills ‘affordable’ for the consumer.

Building on Prime Minister Boris Johnson’s recently announced 10-point plan for a green industrial revolution, the Energy White paper sets out the steps the UK government plans to take over the next decade to cut emissions from industry, transport and buildings by 230mn tonnes of CO₂ – equivalent to taking 7.5mn petrol cars off the road – on the road to net zero by 2050.

Announcing the White Paper, Business and Energy Secretary of State Alok Sharma (pictured) said: ‘Todays plan establishes a decisive and permanent shift away from our dependence on fossil fuels, towards cleaner energy sources that will put our country at the forefront of the green industrial revolution. Through a major programme of investment and reform, we are determined to both decarbonise our economy in the most cost-effective way, while creating new sunrise industries and revitalising our industrial heartlands that will support new green jobs for generations to come.’

The express aim is to generate emission-free electricity by 2050 ‘with a trajectory that will see overwhelmingly decarbonised power in the 2030s’. Low carbon electricity will be a key enabler of the transition to a net zero economy, with demand expected to double by transport and low carbon heat. This will require a four-fold increase in clean electricity generation by 2050, with decarbonisation of electricity increasingly underpinning delivery of the net zero target.

A regular Contracts for Difference (CfD) auction round will be held every two years to bring forward a range of low-cost renewable technologies. Onshore wind will be a key building block, along with offshore wind.

The UK government also confirmed it is to enter negotiations with EDF in relation to the Sizewell C nuclear power project.

A UK Emissions Trading Scheme (UK ETS) is to be established from 1 January 2021 to replace the EU ETS at the end of the Brexit transition period.

As emphasised previously by Prime Minister Johnson, there is an ambitious commitment to deliver 40 GW of offshore wind by 2030, including 1 GW of floating wind – ‘enough to power every home in the country’.

There is also commitment to invest £1bn in carbon capture and storage (CCS) in four industrial clusters by 2030. There are plans for four low carbon clusters to be set up (two clusters by the mid-2020s and two by 2030) and at least one fully net zero cluster by 2030, backed by a new £240mn net zero Hydrogen Fund for low carbon hydrogen production, aiming to capture 10mn tCO₂/y by the end of the decade.

The White Paper recognises that: ‘Delivering the transition will require billions of pounds of investment in clean energy infrastructure, new low-carbon technology and a major shift away from spending in fossil fuel.’

A dedicated Hydrogen Strategy will be published in early 2021.

The UK government has also earmarked £1.3bn to accelerate the roll-out of electric vehicle (EV) charge points, as well as up to £1bn to support the electrification of cars and mass-production of batteries for EVs.

New gas boilers will be banned by the mid-2030s and have to be replaced with low-carbon alternatives such as electric heat pumps or hydrogen boilers. Gas currently represents almost 30% of final energy consumption and 40% of electricity generation. The White Paper says: ‘We will continue to rely on natural gas for some years, even as we work to eliminate carbon emissions from the entire energy system.’ There will be updates to the Gas Act to ensure supplies are decarbonised. Investment will also be needed in the gas network for a potential ‘hydrogen town’, in accordance with the Prime Minister’s 10-point plan.

North Sea plans
Looking towards the future of North Sea operations, the White Paper says: ‘We agree with the OGA’s assessment that the sector must go considerably faster in reducing its own carbon footprint or risk losing its social licence to operate.’ Nevertheless, it continues: ‘The changes proposed in the OGA’s consultation have the potential to make a significant contribution to achieving the White Paper’s goal to achieve a net zero basin by 2050.’

Negotiations are underway to reach agreement on the North Sea Transition Deal in 1H2021, to support the people and communities most affected by the move from oil and gas production, ‘ensuring that the expertise of the oil and gas sector can be drawn on in developing CCUS and hydrogen production to provide green jobs’.

The White Paper says there will be support for the oil and gas sector ‘to repurpose the existing infrastructure in support of clean energy technology’, and a review will be held of the role of the Offshore Petroleum Regulator in the light of the energy transition.

It also commits UKCS operations to meeting the World Bank’s ‘Zero routine flaring by 2030’ initiative and will work with regulators towards eliminating this practice as soon as possible in advance of this date.

The UK Department for Business, Energy and Industrial Strategy (BEIS) is also undertaking a review of policy on the future licensing of domestic oil and gas exploration and production, ‘to ensure continued compatibility of the UK’s licensing regime with our climate obligations and delivering our net zero target by 2050’.

The White Paper concludes: ‘The review is an opportunity for the UK to demonstrate that effective climate leadership can be compatible with maintaining a strong economy and robust energy security.’

Alok Sharma, UK Business and Energy Secretary of State