Clean Growth Strategy to slash emissions and boost economic growth
Following months of delays, the plan was finally presented to Parliament this morning (12 October) where Business and Energy Secretary Greg Clark set out how the UK plans to the “lead the way” on global carbon reductions while driving economic growth.
“This Government has put clean growth at the heart of its Industrial Strategy to increase productivity, boost people’s earning power and ensure Britain continues to lead the world in efforts to tackle climate change,” Clark said.
“For the first time in a generation, the British government is leading the way on taking decisions on new nuclear, rolling out smart meters and investing in low carbon innovation. The world is moving from being powered by polluting fossil fuels to clean energy. It’s as big a change as the move from the age of steam to the age of oil and Britain is showing the way.”
The much-anticipated Clean Growth Strategy sets out how the Government intends to meet the fifth carbon budget, which seeks to limit the UK’s annual emissions to 57% below 1990 levels by the year 2032.
The strategy captures 50 new measures to drive economic growth across the core pillars of innovation, business and industrial efficiency, domestic improvements, transport, energy and natural resources.
The Government has unveiled how more than £2.5bn will be spent on low-carbon innovation between 2015 and 2021 to boost job growth and foster new technologies in low-carbon businesses and supply chains. This includes existing Government spending of up to £505m from the Department for Business, Energy and Industrial Strategy’s (BEIS) Energy Innovation Programme.
Up to £10m will be provided for low-carbon heat innovations for domestic and commercial building use, while around £10m will be provided for measures that improve the energy efficiency of these buildings.
Carbon Capture and Storage (CCS) has been brought back into the fray two years after the Government faced criticism for closing the £1bn competition fund. At the time, critics were concerned the decision could cost the UK an additional £30bn to meet its 2050 carbon targets. Up to £20m will be spent on a CCS demonstration programme.
Up to £20m will be funnelled into viability schemes for industries to switch to low-carbon fuels as the UK forges ahead with its coal plant phase out by 2025. A similar investment will be made to support early stage funding of clean technologies. An extra £14m will be added to the Energy Entrepreneurs Fund to boost competitiveness amongst emerging energy technologies.
Climate change minister Claire Perry confirmed yesterday that the Clean Growth Strategy would feature decarbonisation roadmaps up to 2050 for seven carbon-intensive industries, covering food and drink, paper & pulp, chemicals, ceramics, glass, cement and farming.
The Strategy also includes a “package of measures” to support business to improve energy productivity by at least 20% by 2030. This will lead to the establishment of an Industrial Energy Efficiency scheme to help large companies cut energy use and bills.
Just last week, research claimed that CCS could boost the UK economy by more than £160bn if deployed on the east coast of the country, and it seems the Strategy will aim to capture some of this economic value for businesses. The Strategy includes a goal to collaborate with global partners to invest up to £100m in CCS innovations across industrial sectors.
The Government has already committed to the phase-out of new car sales for petrol and diesel cars and vans by 2040, and this will be backed by a £1bn support scheme for ultra-low emissions vehicles – including discounts on upfront costs on the purchase of an electric vehicle (EV).
More than £840m of public funds will be funnelled towards low-carbon transport innovation to accelerate new fuel uses, while the Strategy claims that Government will work with industry to develop an Automotive Sector Deal to accelerate the uptake of zero-emission vehicles.
The UK has faced numerous warnings that it will miss crucial 2020 renewable heat and transport targets and significantly damage its global reputation as a climate leader unless "major policy improvements" are rapidly enforced.Transport Minister Jesse Norman said: “The Clean Growth Strategy reinforces our clear commitment to reduce emissions across the UK and to end the sale of all new conventional petrol and diesel cars and vans by 2040.
“We are a world leader in ultra-low emission technology, spending £1 billion to support the uptake of these cleaner vehicles and the creation of one of the best charging networks in the world. Advances in low carbon transport technology can significantly boost economic growth and air quality, and we will continue to work with companies to maximise these benefits for all.”
An Energy and Climate Change Select Committee report from September revealed that the UK is less than half way to meeting its heat targets, while the share of renewables in transport fuel has flatlined at 4.75%. While the majority of heat commitments are geared towards household efficiencies, the Clean Growth Strategy pledges to “develop one of the best electric vehicle charging networks in the world”, the help decarbonise the transport sector.
Improving household efficiency
Around £3.6bn of investment has been set aside to upgrade around 500,000 homes through the Energy Company Obligation (ECO), and the Government has extended support on domestic energy-efficiency improvements from 2022 to 2028.
A long-term trajectory to improve energy performance standards – including upgrading private rented homes to Energy Performance Certificate Band C – will also be developed, but only where “cost effective and affordable”.
All fuel-poor homes will be upgraded to Energy Performance Certificate Band C by 2030, and an aspiration is in place for as many homes as possible to reach this level on energy performance. Again, this will only be targeted where “practical, cost effective and affordable”.
This follows the announcement earlier this week that Ofgem would introduce a market-wide price cap for all customers on standard variable tariffs (SVTs), following the introduction of legislation, as promised by prime minister Theresa May.
Further support for offshore wind comes a day after Energy Minister Richard Harrington confirmed that £557m will be made available for less established technologies for future Contract for Difference (CfD) auctions. This comes after last month’s auction results saw offshore wind achieve a record low-strike price of £57.50 per MWh, half the cost of two years ago.
As revealed by the climate change minister, the Government will develop an “ambitious” Sector Deal for offshore wind, which could add an extra 10GW of new capacity by the 2020s.
While offshore wind, energy-from-waste, marine and biomass will all receive support in the next auction in 2019, but established technologies onshore wind and solar look set to miss out again. Ministers would refer to last month's launch of a subsidy-free solar farm at Clayhill as proof that the technology can operate successfully without Government intervention.
The Government's decision to continue support for nuclear will be unpopular among green campaigners who express concern about the technology's environmental impact and cost-effectiveness. The Clean Growth Strategy outlines plans to “progress discussions with developers” to secure competitive prices for any nuclear projects in the future.
Developers of proposed reactors in Wales and Cumbria will be under pressure to keep costs lower than Hinkley Point C, which is already on course to breach its budget by £1.5bn.
Although we are still waiting on Defra’s 25-year Environment plan, the Clean Growth Strategy does provide areas of cross over. The Strategy notes that a new system of agricultural support and business actions on climate change will be established as the UK leaves the European Union (EU).
The Strategy reveals a commitment to create a new network of forests in England, as part of a wider commitment to plan 11 million trees and increase the amount of indigenous timber used in UK construction.
A new Resources and Waste Strategy will be launched, although no timeframe has been provided, to make the UK a “world leader” in competitiveness, resource productivity and efficiency across all sectors. The Government will also work towards an ambition for zero avoidable waste by 2050 to minimise negative environmental and carbon impacts.
Government will also work with businesses and civil society to launch a “Green Great Britain” week to promote clean growth.
Environment Secretary Michael Gove said: “We are determined to be the first generation to leave the environment in a better state than we inherited it, and achieving clean growth is an integral part of our work to deliver a Green Brexit.
“Through our ambitious plans to tackle waste, better manage our precious natural resources and create a more environmentally-focused agricultural system, this government is taking the lead in creating a cleaner, greener Britain.”
Gove believes that Brexit has given the UK a "once in a lifetime opportunity" to become global leaders on agricultural management, as part of a vow to deliver a "green" Brexit.